Health-Ade, the maker of a fast-growing brand of organic kombucha drinks, has raised $7 million from CAVU Venture Partners, a recently launched fund focused on investment and incubation in healthy food and beverage companies. Health-Ade co-founder Justin Trout told BevNET that the funding will be used primarily for the build-out of a new 35,000 sq. ft. production facility in Torrance, Calif.
The deal represents the second major financing round for Health-Ade, which was founded four years ago by husband and wife team Justin and Daina Trout, and Vanessa Dew, a close friend of both. In October, 2013, the private equity arm of beverage advisory firm First Beverage Group purchased an equity stake in Health-Ade. The investment was sourced from a First Beverage fund created with several limited partners, including Coca-Cola’s Venturing & Emerging Brands unit.
CAVU’s investment in Health-Ade gives it a minority stake in the company. CAVU was founded by a trio of high-profile beverage industry veterans: former vitaminwater CMO Rohan Oza, Sweet Leaf Tea and Deep Eddy Vodka co-founder Clayton Christopher, and Suja investor Brett Thomas. Oza told Fortune magazine that he was partly drawn to Health-Ade because he likes “to explore products that not only taste amazing, but which [he thinks] Americans across the country will start embracing as a replacement for soda.”
Although Health-Ade Kombucha is distributed across the U.S., including locations at several Whole Foods regions, the company is operating at full capacity at its current facility in Van Nuys, Calif., something that has limited its ability to take advantage of new retail opportunities. The Torrance plant, expected to open this fall, will give Health-Ade significant room to grow.
“Part of our culture is a sense of optimistic urgency,” Trout said. “We’re very hopeful about the future, and we can’t wait to get there.”
Health-Ade broke ground on the new facility earlier this year, financing initial construction with cash flow. With the CAVU investment in hand, the company will begin the buildout for several key areas of production, including a massive fermentation room and dedicated space for cold-pressing juice; the company uses a variety of juices for blending. Office space for Health-Ade’s 35 full-time employees is also included in design plans for the new plant; it’s a critical aspect of the facility for Trout and his co-founders.
“In a perfect world, we want our team to know more about kombucha than any other group out there,” Trout said. “And having everybody in the same place, where we believe the best kombucha in the world is made, would be a huge bonus.”
Health-Ade is aiming to raise an additional $5 million that will be to used to support continued growth of the brand once the new facility comes online. Trout said that the company has not yet identified a timetable for when it expects to close the round.
CAVU’s investment gives Oza a seat on Health-Ade’s board of directors, where he is joined by Daina Trout, and First Beverage CEO Bill Anderson and managing partner Tom First. Christine Perich, the CEO of New Belgium Brewing, is also a board director and has been involved with Health-Ade since “the very beginning,” Trout said.
While Health-Ade had been in discussions with a number of potential investors “that were definitely interested in getting involved,” after a number of meetings with CAVU and careful deliberation about how the company wanted to grow and evolve, Trout said that it was clear that Oza, Christopher and Thomas would be the right partners for the future of the company.
“Working with CAVU felt the same way as working with First Beverage: smart people passionate, really good fit,” Trout said. “It felt like home.”