Strand Equity Acquires Minority Stake in Bai Brands

Calling Bai Brands, LLC, a “game-changing company,” Strand Equity Partners yesterday announced the acquisition of a minority ownership stake in the coffeefruit beverage marketer. Headed by marketing and entertainment maven Seth Rodsky and Theodore Schwartz, founder and former chairman of APAC Customer Services, Strand was launched earlier this year with a focus on investment in “emerging and dynamic consumer brands.”

“We couldn’t be more excited about the positioning and product differentiation [of Bai],” Rodsky told BevNET. “We’re always looking for emerging categories and leaders in those categories, and Bai really fits that mantra.”

Rodsky said that Bai’s brand proposition as a low-calorie, all-natural and better-for-you beverage and the overall shift toward consumption of healthy drinks were the chief reasons for Strand’s investment. In addition, he noted his belief that coffeefruit is on a path to becoming a burgeoning ingredient in food and beverages. Rodsky also praised Bai’s management team as having established a “look of success” and proof of concept for the brand, which he believes is ready to scale rapidly.

“We are thrilled to have Strand Equity Partners, a company with significant experience in growing brands, join our team,” Ben Weiss, founder and CEO of Bai, said in a statement. “Their investment demonstrates a strong belief in Bai’s mission, and enables us to grow and expand our reach, giving consumers an alternative to traditional caffeinated beverages.”

Strand’s investment in Bai stems from a longstanding relationship between Rodsky and marketing guru and Bai investor Rohan Oza. Rodsky, who counts Oza as a “close associate and partner” first met Oza while a talent agent at Creative Artists Agency (CAA). At the time, Oza was the brand manager for Coke-owned Powerade and a rising star at the cola giant.

According to Rodsky, it was he who first introduced Oza to Chris Lightly, the manager for rapper 50 Cent. By 2002, Oza had moved on to become the VP of marketing for Glaceau’s Vitaminwater, and together with Lightly orchestrated the unprecedented deal for 50 Cent to become the face of Vitaminwater for $5 million and a 5 percent equity stake in the company. Rodsky and Oza stayed in touch after Coke’s $4.1 billion acquisition of Vitaminwater in 2007, and have since regularly shared information on prospective deals and made similar investments in several emerging consumer brands, including Vita Coco and Pop Chips.

Along with Strand’s investment in Bai, Rodsky will serve as an advisor to the company, which earlier this year raised new capital from a number of unnamed celebrities, according to a report in e-mail newsletter Beverage Business Insights. Rodsky said that while Bai has no pending announcement about celebrity involvement in new marketing campaigns for the brand, Bai will likely release such information in “the near future.”

Strand is funded solely by Rodsky and Schwarz, who two years ago sold APAC for approximately $470 million to One Equity Partners, the private equity arm of JPMorgan Chase & Co. As for future investment targets, Rodsky said that Strand would continue to seek out emerging consumer-focused categories and leading brands within those segments.