Incubation Over: L.A. Libations Launches Aloe Gloe With Coke Investment

The news that beverage incubator L.A. Libations had spawned Aloe Gloe as an independent brand partially funded by Coke’s Venturing & Emerging Brands Group (VEB) means a new stage for both entities.

For VEB, it signals a return to direct investment in beverage brands, something that the investment and innovation unit had not done for several years. After placing bets on Honest Tea and Zico several years ago, the unit had helped to execute Coke’s investments in Suja and Fairlife Farms but had invested in brands under its own portfolio only indirectly, with a pair of fund placements at First Beverage and also a minority stake in L.A. Libations itself.

For L.A. Libations, VEB’s investment in the brand is a validation of the company’s ability to create what Aloe Gloe CEO Dino Sarti today called “a big boy company,” one that exists outside of the experimental confines of the incubator’s office, and to actually build a staff and try to take the aloe-enhanced organic water play to a higher level. As part of the investment, VEB’s new CMO, Kim Paige, will become a board member at Aloe Gloe.


The four-SKU line has been a closely-watched experiment run out of the L.A. Libations office. For its first year or two, the founders have said they were keeping the product only in kinds of natural and organic focused stores “where our wives shop” while they tinkered with formulation, packaging, and flavors in the off-hours. It’s now an all-organic, California-sourced line with sales in Kroger, Wal-Mart, Sprouts, and many more of the centralized buying operations that have long been the calling card for L.A. Libations.

“We’ve never had a CMO or marketer – we never had an agency,” Sarti said. “This is the year we really started doing brand-building. It’s the first year that we really started to behave like something that was a big boy company.”

Danny Stepper, an L.A. Libations co-founder along with Sarti and Pat Bolden, noted that the big company’s investment in Aloe Gloe could also be seen as a proof of concept for the smaller firm itself. After all, the relationship runs deep, with VEB-associated brands like Zico and Illy serving as longtime L.A. Libations clients before the venture capital unit became a part owner of the firm.

“VEB investing in L.A. Libations really put us on the map,” Stepper said. “It’s very satisfying for us to really be able to deliver on their vision,” by helping grow a brand that VEB could back independently.

Now, the brand’s growth – and the potential for eventual acquisition by Coke itself – is still tied closely to the soft drink giant’s distribution system. Already having pulled the neat trick of gaining access to Coke’s DSD operation in the Tri-State area and Southern California – where it’s gradually moving away from longtime friend Haralambos Beverage — the company will continue to try to sell into the Coke system around the country, bringing on field sales and marketing employees under Sarti, who has stepped away from his day-to-day role with L.A. Libations. In mid-July, the brand is scheduled to move onto Coke trucks in Northern California.

Dino Sarti, LA Libations

Dino Sarti, CEO of Aloe Gloe

Aloe Gloe has access to 20,000 doors for now, according to Sarti, but ships directly to many of its retailers. He sees tremendous upside to DSD, he noted, with Coke’s team able to get the brand into smaller, independent accounts as well as servicing retail giants like Kroger, 7-Eleven, and Sprouts.

“A lot of our growth over the next couple of years is going to be in these independent accounts that we didn’t have the depth or manpower to reach,” Sarti said. “The Coca Cola Co. has the ability to get us to them.”

L.A. Libations will continue to represent the brand in national accounts. The brand’s sales are still relatively small – Stepper and Sarti would only allow that revenues were greater than $5 million but shy of the $10 million marker that VEB has set out for investment targets in the past — but the company has grown 64 percent in each of the past two years, according to A.C. Nielsen figures cited in a joint press release from VEB and Aloe Gloe.

VEB President Scott Uzzell noted that the investment gives VEB “a further entry in the emerging market segment for plant-based beverages,” adding, “We look forward to partnering with Aloe Gloe to help them capture growth from this exciting consumer trend.”

Stepper, meanwhile, is already looking for ways to graduate L.A. Libations’ other development plays, like Obi probiotic soda and the Arriba energy horchata brand the company launched two years ago, out of the incubator, as well.

To do that, L.A. Libations has also staffed up, to more than 30 employees. It’s added Coke’s former Kroger lead, Wade Duke, to serve as its chief customer officer, and replaced Sarti at COO and CFO with Paul Phillips, a former private equity investor and water entrepreneur.

“What’s at stake for L.A. Libations is to prove we’re not a one-trick pony,” Stepper said, adding that the Aloe Gloe deal is “super-satisfying,” but “Our goal is to prove concepts. Many will fail and that’s ok, some will succeed. That’s what L.A. Libations does.”