According to Hello Beverages co-founder Rusty Jones, 2017 was just a “concept year” for the company, maker of the fiber-enriched flavored water line Hellowater. In 2018, the real work begins.
To help shape and execute their ambitious plans for growth in the coming year, Jones and co-founder Tom Bushkie recently partnered with InterContinental Beverage Capital (IBC), a New York-based middle market advisory group with a focus on CPG industries. IBC’s past clients include premium water brand AQUAhydrate and Miami Bay Beverage, makers of trimino protein water. Under the terms of the agreement, IBC will provide strategic business, production and commercialization advisory services.
Jones views the partnership with IBC as one that will help Hello take the consumer and investor interest the company has generated thus far into and turn it into fuel for the next phase of development.
“For us, the priority was the road map that helps us focus,” explained Bushkie. “When Rusty and I co-founded the company, we wanted to be everywhere tomorrow. So it’s good to have some people who have the knowledge and experience to say ‘OK, let’s get a plan together and execute it.’”
Thus far, the Chicago-based company has focused mainly on establishing a presence locally. Jones said Hellowater, a five-SKU line of sugar-free fruit-flavored natural essence waters infused with 5g of fiber, has been built through independent markets and up-and-down-the-street distribution. In starting with small scale neighborhood retailers, the company looked for a diverse demographic for proof of concept and feedback on the drink’s fiber callout. As the brand begins to attract interest from conventional grocery chains, Jones said having experienced industry veterans onboard would be critical in guiding expansion.
“We aren’t out there wasting money to try something that’s already been done that might not work for a brand like ours or from a distribution or retailer standpoint,” he said. “We are looking for where do we fit right away to win and to build that story. It helps to have that great, solid advisory board to lead us in the right direction or tell us we didn’t even think about that.”
Jones and Bushkie noted that the finer details of Hello’s growth strategy are still being discussed with IBC. In the meantime, the company is still making gains in retail penetration and distribution; Lakeshore Beverage has been signed to handle direct store distribution (DSD) operations in Chicago, while a recent partnership with Balkan Beverage has help land new retail accounts in the Buffalo, N.Y. area. Further expansion in Texas is on the horizon as well, according to Jones.
Beyond opening new regional markets, IBC has also advised Hello on marketing and design decisions.
“We’re already looking at tweaks to packaging prior to bringing on IBC,” said Jones, noting that the Hellowater won an award for Best Packaging at the KeHE Natural Show 2017 in Austin in October, which he called validation for the pivot into “emotion branding” and “millennial packaging.” He continued: “IBC came on and confirmed what we thought would be good subtle changes, nothing too significant. They added their two cents and they believe we are on the right track.”
Even as Hello’s plans for 2018 are still being finalized, the company already has reason to celebrate. Jones and Bushkie said they welcomed the result of a vote by the Cook County, Ill. Board of Commissioners last month repealing the controversial one-penny-per-ounce tax on sugar-sweetened beverages, known as the Sweetened Beverage Tax Ordinance. The tax applied to sugar- or artificially sweetened drinks, including Hellowater, which contains stevia and 7g of erythritol.
“We didn’t see significant hinderance to our mission [due to the soda tax],” said Bushkie. “It’s great validation for the brand if we can still sell at $2.80 after all the taxes. Now that the repeal has come through, we heard it may have affected a lot of change already, but we’ll see how it settles back in.”