Function Drinks Bought by Sunsweet

Function Drinks, once seen as a potential heir to the grow-fast-and-flip national DSD model exemplified by Glaceau, has been sold to produce and beverage manufacturer Sunsweet Growers Inc.

While deal terms were not disclosed, investment banker Michael Burgmaier of Silverwood Partners, who had worked for Function on sale, provided confirmation.

Function is a line of health and performance new age beverages with names like Urban Detox, Light Weight, and Alternative Energy. Originally rolled out nationally with multi-million dollar investment from the likes of Wall Street investor Bruce Wasserstein — as well as many of the distributors who initially brought it to market — Function was started by three friends in Los Angeles, including an orthopedist, Dr. Alex Hughes. With a big wallet and a strong Los Angeles following, the brand attracted top-flight sales talent, including SoBe veteran Bob Miller to run its sales operation.

After quickly gaining store shelves nationwide, however, the economy fell into deep recession — hurting the company’s initial model of spending heavily to juice revenues, and leaving Function something of a cautionary tale. Miller and much of his high-powered sales team eventually left, and the company was forced to work from a much smaller retail footprint.

The brand fought back, however, eventually cutting down a myriad of SKUs to just three varieties, and dedicating itself to key channels and tight focus. Since 2009, the company has reversed its course, demonstrating discipline and  staying largely under the radar. The brand began looking for investors or acquirers early this year, according to a person with knowledge of the deal.

“It’s a great brand, a good product, and at the end of the day, we talk about velocity and same store sales,” Burgmaier said. “The company did a great job on focusing in on key store and retailer sales growth.”

Hughes will remain on board as the company’s spokesman and medical advisor, while current CEO Dayton Miller and President Josh Simon will retain their position with the company. The deal was revealed to Function employees on Wednesday, with all employees being offered the chance to remain on board, according to the source.

Sunsweet, best known as a collective selling prunes and prune juices, has become increasingly active in the beverage industry in recent years due to its large-scale co-packing capabilities and its strong, steady hold on its own agricultural category. The facility has bottled products for PepsiCo and Adina, among others. Meanwhile, the company has also recently made small investments in a pair of entrepreneurial beverage companies, including Ayala’s Herbal Water and C2O, a coconut water company.

And in addition to Sunsweet’s increasing activities on the investment side, there are some synergies — although some might scratch their head at the combination of an agriculturally-based acquirer and a company that has attempted to derive much of its credibility from ingredients verified by scientific studies. Many of Function’s best customers are in Whole Foods and other natural channels — places where Sunsweet products have a strong presence — and Sunsweet itself has begun to play in the supplement area, where Function, which is classified as a dietary supplement, is often sold.