Sparkling Growth: 6 Questions with David Karr of Guayaki

Although its co-founder said that Guayaki isn’t one of those brands trying to get into Target, with the launch of its new sparkling drink line, the yerba mate company may end up there anyway.

Aiming to elicit greater trial and exposure of yerba mate among mainstream consumers – most of whom are unfamiliar with the ingredient and its natural caffeine content – Guayaki recently launched a line of sparkling yerba mate products in May. Calling it the company’s “most successful product launch ever,” David Karr, the co-founder and vice president of marketing for Guayaki, noted that while the products are still in their infancy, sales have surpassed expectations to this point.

The line features three flavors – Classic Gold (a cola), Pomegranate Cranberry, and Grapefruit Ginger – and is packaged in bright yellow 12.5 oz. slim cans, which, unlike Guayaki’s other products, focus greater attention on the words “yerba mate” than on “Guayaki.” The products are sold in a range of natural and hybrid retailers including Whole Foods and Sprouts, and carried throughout Guayaki’s DSD network, including New Jersey-based Dora’s Naturals for distribution in metro New York, along with UNFI, Kehe, Tree of Life, DPI in the natural channel.

BevNET recently spoke with Karr about the sparkling line and its role in attracting new consumers of yerba mate. Karr also discussed Guayaki’s approach to sales and marketing, the importance of maintaining the sourcing of consistent and high quality yerba mate, and the future of the brand in terms of new product lines and supply chain development.

David Karr, co-founder, Guayaki

BevNET: Where do you see the new sparkling line fitting it with the rest of Guayaki’s portfolio?

David Karr: We see it as a great lunchtime companion, for consumers “trading up” from an afternoon coffee – we’re actually seeing a lot of that. It’s the kind of product that would probably show up in a lot of delis in New York and higher end places, in general, as well as some of our DSD corner stores, if the right demographic is there. It’s still a small percentage of our sales, but it shows a lot of promise. I expect it to be a big product for us.

BN: Considering that Guayaki is attempting to attract greater mainstream appeal with sparkling yerba mate, could it eventually be the company’s bestselling line?

Karr: I wouldn’t say necessarily say that, but we’re very focused on the long-term growth of our brand and the yerba mate category. Our loose teas are doing best among the lines, but we don’t have one line that is making up the lion’s share of its business.  It’s spread out among all the yerba mate products.

BN: With the launch of the sparkling line, Guayaki now has six yerba mate product lines and 26 SKUs in total. Will the company continue to expand its number of offerings, specifically in ready-to-drink products?

Karr: We have a lot of ways to drink yerba mate. We have six or so tea bag packages, six cans, eight glass bottles; we would extend those lines only if they continue to really grow. As for next year, we’re not launching any new products. We’re actually trying to trim the number of SKUs.  But just because we’re not putting out a brand next year, doesn’t mean we won’t put one out the following year.

BN: Guayaki is a dominant player in the relatively tiny yerba mate category. What kind of competition do you see within the space, and where do you see the biggest opportunities for growth?

Karr: We’ve seen a lot of competitors come and go, trying to seize opportunity [in the category] with a lower price. I’m assuming that we’ll have stronger yerba mate competitors in the future, but today… I think we pull a lot of coffee drinkers that are looking for a healthier source of caffeine, and also energy drinkers who want a cleaner source of energy.

BN: Guayaki seems to do very little in the way of traditional marketing and advertising. How does the company promote the brand?

Karr: We operate more from a pull frame of mind, as in “if we build it, they will come.” We just go with the organic growth of the brand. We don’t consider ourselves a marketing company, and say “let’s create the next trend.” We are building the yerba mate category, and we try to fit the right mate product into the right set. We do some event marketing but no traditional advertising or marketing. Peer-to-peer [marketing] is a big part of developing our consumer base.

BN: So with a minuscule marketing budget, where does the company focus most of its time and resources?

Karr: We‘re spending money on other ways to improve our business. We don’t own our supply, but we have contracts with all of our growers. Alex Pryor, who is Guayaki’s co-founder and lives in Buenos Aires, has set up a sourcing team that works in Brazil, Argentina and a little bit in Paraguay. We’re on the ground creating and getting the best mate in the world, which makes a big difference when you’re trying to formulate later on.

We’re also developing and reinforcing the vertical nature of our supply chain. We’re completely vertically integrated from our rainforest projects, to processing, to import/export, to co-packing. We’re looking at everything, so that when the yerba mate category is ten times its size, we’re going to be able to grow with it gracefully.