Hawaiian coffee company KonaRed has closed a “significant capital raise” from emerging consumer brands venture capital fund Venice Brands, which will be directed towards supporting sales, marketing and distribution of the brand’s range of coffee products.
“We are incredibly excited to partner with KonaRed, Kyle and his team,” said Greg Willsey, founder and CEO of Venice Brands, in a press release. Willsey had previously worked with KonaRed CEO Kyle Redfield at POM Wonderful. “The company’s brand and product lines are exactly what we look for at Venice Brands: incredibly strong growth, high-quality ingredients with a great story, compelling sales velocities, experienced management, and the ability to become a true leader not only in cold brew coffee but in the broader premium beverage category.”
Founded in 2009, KonaRed is a vertically integrated company that produces a range of products made from Kona coffee grown on the slopes of the Big Island of Hawaii. In addition to marketing a five-SKU line of ready-to-drink (RTD) cold brew coffee in 12 oz. and 32 oz. glass bottles, each made with the brand’s proprietary coffee fruit liquid extract, the company also sells dry Kona coffee beans, Hawaiian coffee fruit juices and a coffee fruit nutritional supplement. Its products are sold nationally at retailers such as Target, Kroger, Whole Foods and 7-Eleven.
According to data from market research group IRI, sales of KonaRed RTD coffee have increased 639 percent year-over-year in a 52-week period ending on Sept. 10.
The deal is Venice Brands’ second investment since launching earlier this year; in May, the fund announced an investment for an undisclosed fee in frozen bone broth brand The Osso Good Company. In an interview with Project NOSH that month, Willsey said Venice Brands typically writes checks of $1 to $5 million in exchange for 25 to 40 percent of a company.
Under the terms of the agreement, described in a press release as a strategic multi-year equity deal, KonaRed’s management team and board of directors will remain intact. The total size of the investment was undisclosed.
Speaking with BevNET, Redfield said that, in the past, the company had spent much of its time pursuing new investment. The injection of new financing from Venice Brands, as well as its industry expertise, will allow KonaRed to focus on brand development and pursue a larger share of the ready-to-drink (RTD) coffee category.
“To compete with brands like Starbucks, Peet’s and Chameleon, we had to raise some capital,” he said. Redfield explained the company will take a three-pronged approach towards near-term growth, using the new funding to support increasing distribution, marketing initiatives and new innovations, including some forthcoming “unique and fun” plays in cascara.
In addition to the deal with Venice Brands, Redfield said KonaRed recently signed an exclusive deal with sales and marketing agency Impact Group to represent the brand in all conventional and natural grocery retailers. Since then, 200 additional retailers have signed on to carry its products.
While not quite comparable to Nestlé’s head-turning acquisition of Chameleon Cold Brew just last week, news of further investment in KonaRed speaks to cold brew’s enduring appeal to investors of all types.
“The growth is going to continue to be exponential,” he said. “The investment activity of companies like Nestlé is really smart. It makes sense for those kinds of brands because the craft aspect [of cold brew] is important.”