Palm Tree Crew, which announced an investment in Cove Soda earlier this week, believes there’s ample opportunity to have “multiple winners” in the rising functional CSD category, CEO Michael Diaz told BevNET. The firm, founded in 2020 by DJ Kygo and his manager Myles Shear, is also an investor in Poppi, and several other CPG brands including Immi, The Long Drink, Fly By Jing and Rob’s Backstage Popcorn.
“We’ve canvassed and looked at the entire market for the last couple years, and there’s lots of great brands out there that are building real scale with customers, that customers have an affinity for,” Diaz said. “But it wasn’t until we found Cove Soda that we really felt like we found a product and a brand that checked every box in terms of taste, health benefits, real brand equity, strength of the founder and management team, and a real understanding of what the customer wants.”
Cove, founded in 2016 as a kombucha brand, rebranded in 2022 and has now pivoted entirely to its probiotic soda line. Diaz said the brand made the decision to drop kombucha prior to connecting with Palm Tree Crew, but the tightened focus on functional soda is now leading to Gen Z-friendly flavor innovations like its bombsicle-styled Ice Pop SKU.
“In an increasingly fragmented CPG landscape with new entrants every day, new products on shelf, even with a really great product, it’s critical that the founder and management team understand how to properly communicate the Brand Story to customers,” Diaz added.
With two functional, gut health-friendly sodas in its investment portfolio, Diaz said Cove will work to grow in similar ways to Poppi – focusing on experiential marketing, messaging focused on taste, and celebrity partnerships, including a roster of entertainers like Chris Rock and Diplo brought in as investors by Palm Tree Crew. As well, the firm will be working closely with Cove to introduce the brand to its own hospitality properties.
“We recently launched our hospitality business of restaurants, hotels,” he added. “And so finding ways to organically and authentically integrate our portfolio brands into those properties as well is a part of the strategy.”