Bevscape: The Latest Beverage Brand News

Yerbaé Raises $4M, Leans Into Sports & Entertainment

Yerbaé has raised over $4 million in the “first tranche” of a new funding round backed by a variety of athletes and entertainers, the Arizona-based plant-based beverage brand announced in August.

In a LinkedIn post, Yerbaé co-founder and CEO Todd Gibson said the round includes investments from individuals from the NFL, MLB and the U.S. Soccer Federation.

Those individuals will be heavily involved in the brand: In the press release, Yerbaé said its new Sports & Entertainment Board will be “comprised of prominent celebrities and sports stars” who will “play a pivotal role in guiding Yerbaé’s strategic decisions, brand positioning, marketing campaigns and product innovation.”

According to the company, the board committee will include a “soccer phenomena,” a CrossFit champion, “a globally acclaimed country music sensation” and “four revered football stars.”

Yerbaé previously announced that it had added brand ambassador and CrossFit Games champ Annie Thorisdotter to a board advisory group earlier this year.

“We are excited to embark on this incredible journey with our exceptional Sports & Entertainment Board members,” Gibson said in the release. “Their dedication to wellness and performance perfectly aligns with our brand’s values. By working together, we aim to create products and experiences that resonate with our consumers on a deeper level.”

Yerbaé went public in February on the Toronto Stock Exchange through a reverse triangular merger. At the time, Gibson told BevNET that one top benefit of going public is the ability to raise capital on a consistent basis and provide the business with more flexibility in its fundraising capabilities.

This latest financing is expected to support Yerbaé’s product innovation, distribution expansion and marketing efforts, the company said, as well as increased production, working capital and “general corporate purposes.”

The funding consisted of the issuance of over 2.2 million units made of one common share of the company and one common share purchase warrant at a price of $1.83 per unit. Each purchase warrant entitles the holder to one additional common share at a price of $2.15 for up to 24 months from the date of issuance.

In its Q1 2023 earnings report in May, Yerbaé reported net sales growth of 130% to $3.5 million in the quarter, with volume sales also up 130%.

On May 16, the company announced it had secured a $2.5 million new accounts receivable and inventory line of credit from Michigan-based bank Oxford Commercial Finance.

Paper For Plastic: PepsiCo Drops Plastic Ring Packaging

As part of its pep+ sustainability campaign, food and beverage giant PepsiCo announced in August its intention to progressively roll out paper-based packaging solutions to replace the company’s reliance on plastic rings across its beverage portfolio.

The paperboard packaging, first available on 6-packs, is made from recycled materials and is itself recyclable, reducing the company’s reliance on non-recyclable plastic rings. The new paper-based designs will begin to show up throughout the U.S. in a “phased regional approach” similar to a process already begun in the beverage company’s Canadian operations. The company reported that the innovation would be instituted through its Pepsi, Pepsi Zero, MTN DEW, Starry and Gatorade brands among others.

Launched in September 2021, PespiCo’s pep+ initiative (PepsiCo Positive) aims to make the food and drink maker’s operations more sustainable and achieve net-zero emissions by 2040. Under the pep+ pillars of “Positive Value Chain,” PepsiCo intends to “improve packaging sustainability including reducing virgin plastic per serving by 50%” by 2030.

In the company’s 2022 annual report, PepsiCo set a new goal for “20% of beverage servings would be delivered through reusable models by 2030” as it furthered its goals of reducing unsustainable packaging systems in its value chain.

The company conceded during the release of its 2022 ESG Report in June, that although progress had been made in nutrition, agriculture, social (people and communities), water-use efficiency and safe water access, reducing emissions and its packaging supply chain have been slower to transform into more sustainable models.

PepsiCo’s move is following consumer demand for more sustainable packaging solutions in large food and beverage brands. Coors Light announced in March 2022 it was ditching the plastic, six-pack rings in favor of a paper solution with hopes of removing the plastic rings from its supply chain by the end of 2025.

Coca-Cola reports that 90% of its packaging is currently recyclable with a goal to hit 100% by 2025. Coke’s bottlers have been transitioning to a paperboard holder for can multipacks in Europe. In the U.S., Liberty Coca-Cola adopted the KeelClip paper packaging system at its Elmsford, New York facility last summer. The company has also been experimenting with 100% plant-based bottles for nearly two years.

How these new packaging initiatives affect the bottom line of beverage companies is currently unknown. Yet, 82% of respondents in a recent survey said they would be willing to pay more for sustainable packaging, according to Trivium Packacking’s 2023 Buying Green Report.

Icelandic Glacial Plans Facility Expansion, Retail Growth After Fundraise

It’s an international brand, and now, with cash in hand, it’s time for international growth.

That’s the way Icelandic Glacial CEO Reza Mirza categorized the news that the brand had received new equity funding from a group of new and existing investors. Reached by BevNET after his return from Europe in September, Mirza said the new financing and investment partners will position the brand for significant growth in the U.S. and elsewhere over the next year, with plans to expand its sales and marketing teams across channels and increase capacity at its Iceland production facility in order to meet demand and fuel innovation.

“We have been showing strong double-digit growth with very constrained resources,” Mirza said. “So now with this investment which is coming in, our team is very excited to not only have the right product selection for the channel, but for us to really invest in sales and marketing. Our marketing budgets have been so small all these years that now we really want to invest in building the brand and achieve the ambition that we have as an organization.”

The investment saw the nearly 20-year-old brand sell a “substantial stake” in the international brand to Iceland Star Property Ltd., a holding company based in Liechtenstein. The deal also included additional funding from existing investors, including the brand’s founders and Blackrock’s U.S. Private Credit team, which converted and reinvested the bulk of their existing debt in the company into equity.

As part of the deal, a new board of directors was appointed with incoming chairman Johan Dennelind, who has previously served as president and CEO of Swedish telecom multinational Telia.

Icelandic Glacial produces a line of naturally alkaline spring waters sourced from Iceland’s Ölfus Spring. In addition to still water offerings in various formats, including plastic and glass bottles, the brand has recently expanded its portfolio into flavored sparkling waters and, coming this fall, canned still water.

According to Mirza, about 75% of Icelandic Glacial’s business is in the U.S. where the brand has around a 60%-65% ACV in the conventional grocery channel. Because the company has been working from limited funds for years, Mirza said he has taken a channel-by-channel approach to the market to avoid spreading resources too thin.

With this new round, Icelandic Glacial is now setting its sights on convenience stores, as well as an expanded presence in on-premise and foodservice. Its upcoming 11 oz. canned line, Mirza said, will be a focus for both channels while its glass products – which are once again in production following a supply disruption last year – will be pushed for on-premise.

The company will be expanding its sales and marketing teams, he added, and has already finished hiring new positions in Los Angeles with the next target being a larger headcount on the East Coast and in Chicago, seeking area and regional sales managers. In particular growing the on-premise team is a goal – the company currently only has one person running that channel.

“Our strategy is to put people in markets where we [already] have retailers,” he said. “I’ve seen too many brands put in people and then they wait for the business to come; our strategy has been to get the business and then start the people.”

Internationally, Icelandic Glacial has around a 65% market share for bottled water in its namesake nation of Iceland, while the U.K., Canada and the Middle East are “growing significantly,” Mirza noted. Across all countries, he said the international business is up around 180% year-over-year.

The new investment group is expected to be helpful in opening up new opportunities in the European market, he said, and has already introduced the company to several major retail chains there.

The company is also putting funds into its manufacturing expansion, which it intends to expand by 30,000 square meters (about 323,000 square feet). That growth will also support Icelandic Glacial’s ability to innovate; Mirza said the brand is aiming to become an “all-around hydration” platform with “an Icelandic essence.”

“The heart [of the brand] is all about Icelandic and the purity,” he said. “That is going to be part of the factory expansion – to really supply all the innovation that we are going to be launching.”

Molson Coors Ups Its Stake in ZOA with New Investment

Molson Coors Beverage Company’s faith in Dwayne Johnson-backed energy drink brand ZOA is rock solid.

The beverage conglomerate announced in September that it “will strengthen its investment” in ZOA as part of its overall Beyond Beer non-alcoholic beverage growth strategy. As part of the investment, Molson Coors will remain ZOA’s exclusive distribution partner and will gain a seat on the brand’s board of directors. Financial terms of the deal were not disclosed.

After its launch in 2021, ZOA quickly established a prominent footprint in the U.S. and Canadian markets thanks to Molson’s distribution network with a strong trial sales period. But the new investment arrives as ZOA has faced sharp declines to its brick-and-mortar sales in the U.S. against a saturated energy category.

Initially introduced with a line of zero sugar 16 oz. canned energy drinks, ZOA unveiled a rebrand across its product line, shifting to a 12 oz. canned format and reformulating the liquid to increase its caffeine and Vitamin C content, as well as introducing several new flavors. The brand has been a prime component of Molson’s Beyond Beer strategy and comes on the heels of Molson’s acquisition of whiskey distiller Blue Run, which marked its first spirits portfolio brand.

According to the company, ZOA is available in over 42,000 retail locations with more than 160,000 total points of distribution across the U.S. and Canada, as well as online. The company said it reported more than $100 million in sales in 2022 with 138% year-over-year growth.

However, scanner data has suggested that the brand’s core energy drink line in U.S. brick-and-mortar MULO and convenience stores has struggled against the broader energy drink category: in the 52-weeks ending August 12, NielsenIQ reported the brand was down -26.1% (accelerating to a -41.1% drop in the two-week period), while Circana cited its dollar sales at -18% to $36.6 million in the 52 week period ending August 13, including grocery, drug, mass, convenience, military and select club and dollar retailers in its data set. Neither data set tracks Canadian sales, or ecommerce or foodservice sales.

The challenge for ZOA has come as the energy drink category has become one of the fastest growing beverage segments with rising involvement from strategics. In addition to Monster Energy’s continued dominance of the space (which appears poised to continue with Bang in its portfolio) PepsiCo-backed Celsius surpassed $1 billion in sales this year, while Keurig Dr Pepper has aligned with C4 and Anheuser-Busch has fueled Ghost. Independent beverage marketer Congo Brands has also had dual success in the space with Alani Nu and its PRIME Energy line, the latter of which launched in January and reported over $106.1 million in retail dollar sales in the 52-weeks ending August 26, according to NielsenIQ.

Much of ZOA’s retail business has been serviced by brand incubator L.A. Libations, in which Molson Coors also owns a minority stake. Danny Stepper, co-founder and CEO of L.A. Libations, told BevNET that while ZOA had a strong opening when it launched in 2021 – supported by a strong media push featuring The Rock, including a Super Bowl ad – he acknowledged that driving repeat sales over the past year has proved challenging.

“We opened on Broadway, really big and really fast,” Stepper said. “We made some mistakes, like all brands do, in the beginning.”

However, with the recent reformulation and rebranding, he said the company has learned from the initial rollout and now believes ZOA is poised to compete in the current energy drink landscape with repeat rates in the natural channel that are “super compelling.”

“What we have now is built for speed,” Stepper added.

Since March, ZOA has been run by CEO John Galloway, a former president at Godiva Chocolate and a veteran at PepsiCo overseeing marketing for Gatorade and IZZE, who initially joined the brand as president and CMO in December.

With the new investment, ZOA now intends to double its media spend and marketing budget for 2024, continuing to focus on its “Fuel Something Bigger” campaign consisting of digital, out-of-home and paid social media ads.