San Francisco-based Rhythm CBD Seltzers, is deepening its presence in its home market with the announcement of its first distribution partner, Bay Area distributor Danlies.
In signing with Danline, Rhythm has landed with an early adopter of CBD products which also services brands like VYBES, Daytrip, Kickback, Proposition Cocktail Co. and Kefla Organics in over 900 accounts. According to co-founder and CEO Ian Monat, working with Danlies will allow the brand to rapidly expand its current retail footprint of about 120 self-distributed accounts in the Bay Area, as well as Phoenix, Arizona (where CFO Martin Guerrero is based) and New York. The company also hopes to add additional distributors in those states in the near future.
Monat said the Danlies partnership will be a significant leap forward for the two-man startup, allowing the team to “focus on growing the business in other ways.”
“We do a lot of independent fulfillments, a lot of drop shipping, and a lot of in-town product runs — we’re still running around with Rhythm in the trunk of our car some days,” Monat told BevNET. “So it’s a huge time saver for me, and then it also allows us to penetrate the Bay Area more deeply.”
Rhythm’s functional sparkling waters are available in Awake (Grapefruit Rosemary with caffeine), Dream (Blueberry Lavender with melatonin) and Recover (Lemon Ginger with turmeric root extract) varieties. The core line contains 15 mg of hemp CBD per 12 oz. can (sold for $5.99) and this summer the company introduced its smaller “Shorties” line, featuring 10 mg of CBD per 8.45 oz can ($3.99). Rhythm sources its CBD from California-based cannabis infuser Vertosa.
The brand is currently sold primarily in independent accounts but has begun to add small restaurant and natural grocery chains around the Bay Area, as well as country clubs, hospitality and bar accounts. The Shorties line has helped drive on-premise sales, with the company now promoting the brand as a cocktail and mocktail mixer.
“Where we want to be is very strong in off-premise, natural grocery chains, and then on-premise bars and hotels — that’s where we really see a lot of opportunity,” he said. “I want to see a Rhythm Dream in every minibar in every hip hotel…. It’s a perfect fit to have that little nightcap waiting for you in your hotel minibar at the end of a business trip.”
The company’s latest SKU is Sport, a Strawberry Hibiscus flavor with electrolytes and vitamins that is rolling out to stores at the end of the month. Although he acknowledged that sparkling canned sports drinks are somewhat unorthodox, Monat said he believes the flavor will be “a top seller” with “mainstream wide appeal” that can reach active lifestyle consumers.
This summer, Rhythm closed a $300,000 friends and family funding round, which will fuel the brand through the end of the year, and aims to open up a seed round in the first or second quarter of 2022, Monat said. Though Guerrero is the only other full-time employee, Monat said the company currently works with independent sales brokers and several part-time team members, and is now aiming to hire a Head of Sales to help facilitate the expansion.
CBD beverages have made significant leaps forward in the mainstream in recent months, with major distributors like Southern Glazer’s Wine & Spirits bringing on infused brands, large beverage companies such as Molson Coors increasing their stakes in the category, and — perhaps most importantly — a new California law that legalized and regulates the sale of CBD food and beverage products.
For a startup like Rhythm, however, the lack of federal guidance on CBD has remained a hindrance, particularly in the brand’s ability to advertise online. Although Rhythm operates a direct-to-consumer platform, Monat said ecommerce has not been a focus and digital marketing has been difficult as a CBD product.
The company is now preparing a rebrand of its entire product line, he said, expected in late December or early Q1. In addition to an updated look and feel, the new packaging will replace all references to “CBD” on the label with “hemp.”
“We’ll probably refocus on direct-to-consumer when the new packaging arrives,” Monat said.