Kitu Life Super Coffee has signed a master distribution agreement with Anheuser-Busch InBev (AB) that will place the brand on DSD trucks nationwide, the company announced today. AB’s investment arm ZX Ventures will also take a minority stake in the brand, pending the closure of an open funding round.
The New York-based brand will serve as AB’s exclusive master coffee for 18 months, though wholesalers can still carry additional brands, according to sources close to the deal. In July, the company closed a $25 million funding round led by Skyview Capital. ZX Ventures also participated in the round along with Acronym Venture Capital, Rx3 Ventures, Echo Capital Group, Anthos Capital, actor Patrick Schwarzenegger, Denver Nuggets player Mason Plumlee, and retired NBA All-Star Baron Davis.
CEO Jim DeCicco said the company previously discussed potential investments with ZX Ventures and in Q1 expanded its DSD network with 60 AB wholesalers across the country. However, Super Coffee became “bullish” about securing a national distribution agreement once rumors began to swirl around performance energy drink Bang’s departure from the AB system for PepsiCo began. The brand is more focused on competing against Starbucks than it is energy drinks, DeCicco noted, though the absence of a leading caffeinated beverage in the AB portfolio provided Super Coffee with the opportunity to strike a deal.
“To build our business to its fullest potential, we needed a national DSD network,” DeCicco said. “AB delivers to every channel of trade, every geography and appeals to every demographic. Our goal is to mass-produce positive energy, which means making our products accessible to everyone everywhere and AB is uniquely positioned to help us do that.”
Super Coffee reported $18.1 million in sales for the 52-week period ending March 22, a year-over-year increase of 984%, according to market research firm IRI. Earlier this week, the brand announced a new plant-based line, which is intended to expand its consumer base with dairy-free and vegan consumers.
According to DeCicco, many of Super Coffee’s current national customers are serviced through direct distribution — including Kroger, Publix and Walmart — and “anytime” the company transitions a direct customer to DSD it “immediately” sees a 30% increase in sales. The partnership will also allow Super Coffee to increase its presence in the convenience channel, which is “currently dominated” by Starbucks and where DeCicco said the brand only has about 2% ACV.
“This is big for us,” DeCicco said. “We’re aggressive on building displays, sort of achieving that incremental off shelf placement in stores. And I think that’s going to be the most immediate impact with Anheuser Busch is the ability to do that in national accounts all across the country.”
The partnership also gives AB a stake in the cold brew coffee and functional beverages categories as it continues to expand its nonalcoholic beverage portfolio. Though the company had previewed a relaunch of its Hiball coffee line at Natural Products Expo West 2018, the line is no longer listed on the brand’s website and is listed as out of stock in several online retailers. As well, AB wholesalers are still reeling from the loss of Bang, which surpassed $1 billion in sales this year, to the PepsiCo distribution network last month.
“The analogy we like to use is that we are to Starbucks what Bang was to Monster,” DeCicco said. “Sort of the zero sugar functional alternative. Starbucks has really built a brand on flavor and indulgence and people know what to expect with Starbucks [and] we want to replicate that flavor with zero sugar and added benefits like protein and MCT oil.”
Though sampling efforts have been put on hold due to the COVID-19 pandemic, DeCicco said the company has converted its 100-person brand ambassador team into merchandisers responsible for securing in-store displays and hanging coupons. The brand will also work with digital retail services such as InstaCart and Ibotta to drive trial and will “be aggressive about promos” as rollout into the AB network begins, he added.
As well, Super Coffee intends to utilize celebrity influencers to promote the brand, an initiative helped along by high profile investors such as Baron Davis. DeCicco noted that in particular Davis’ support for the brand has drawn the attention of other NBA players who were interested in participating in the company’s open financing round.
“Celebrity investors can really open up new channels for us,” he said. “I always say influencers influence other influencers. Baron Davis doesn’t just have a lot of fans, but a lot of NBA guys follow him. So what the cool thing about Baron is it’s led to other opportunities.”
Update 7/1/2020: This article has been updated to include details of the recent financing round, including the names of individual and institutional investors.