Sweet Leaf to Harness Tradewinds on Sail toward Sales Goals

With the approval of the high-end, organic player Sweet Leaf Tea Co. to purchase the mainstream tea company Tradewinds, the private equity group Catterton Partners is taking steps to insure a large payout when the time comes for Nestle to finally buy out Sweet Leaf Tea from its investment partners.

Coming hot on the heels of the departure of founder and CEO Clayton Christopher, the Tradewinds acquisition allows Sweet Leaf to add positive sales numbers to its bottom line as it attempts to reach revenue goals that will ultimately lead to a large payoff for investors through a Nestle purchase. The Tradewinds brand is a big, profitable player in Midwest U.S. mainstream channels, and its positive cash flow will also help decrease the debt load for Sweet Leaf as the upstart organic tea company battles to broaden its reach via more mainstream supermarket and national DSD accounts.

With Tradewinds’ own strengths factored in – it sells to mainstream grocery, Wal-Mart, Trader Joe’s, and other large accounts — the acquisition allows Sweet Leaf – which has fought to escape its original natural channel distribution — to conduct a “dual-brand strategy,” according to a source close to the deal, while waiting for the tea category to shake out a bit over the next year or two – a shaking out that has begun with economic pressure inside Steaz, for example, said the source. While the acquisition had the blessing of top Nestle executives, there is conflicting word from sources as to whether the deal is part of a potential strategy to parallel the series of regional brands Nestle used to assemble its bottled water juggernaut.