After years of declining sales and a retreading footprint, Steaz owner Nova Naturals, a subsidiary of Novamex, has brought on the organic iced tea brand’s original leaders to bring the brand back to a positive growth trajectory.
Joining Steaz as contract workers through their firm BeyondBrands, co-founders Eric Schnell and Steven Kessler have been working on the revival initiative for roughly 18 months and they say they’re ready to begin executing on a market strategy they believe can make Steaz competitive in the modern beverage landscape. First up is a brand refresh – including new formulations and can designs – rolling out in the coming months.
“We sold the company almost a decade ago, and the new owners realized that they had lost their way,” Schnell said in a call with BevNET.
Schnell and Kessler founded Steaz in 2002 at a time when “organic” and “fair trade” were obscure terms requiring heavy consumer education. After growing the business to be a significant iced tea competitor in the natural and conventional channels, they sold the business to CPG portfolio company Nova Naturals in 2016.
However, in the years since the sale, Schnell said that Steaz’s revenue fell by roughly 50% from where it was at the time of the acquisition. Attempts at expanding the brand into energy, via a now-discontinued yerba mate line, also fell flat.
Mike Fransz, director of marketing at Nova Naturals, was candid in explaining what happened: the new ownership had no real idea what to do with the brand.
According to Fransz, internal leadership of Steaz at Novamex was regularly being tossed around from person to person, resulting in little consistency on the team and in the vision for the business. In turn, consumers were moving on from the brand and the company couldn’t figure out how to recapture the early resonance Steaz had with shoppers.
“At the end of the day, we were missing something,” Fransz said. “Really what we were missing was our connection and our ‘Why.’ We didn’t realize that we had moved a little beyond what Steven and Eric had initially intended for the brand to be.”
After an encounter between Kessler and the Steaz team at Natural Products Expo West last year, Nova Naturals determined that if it wanted Steaz to survive, the best bet was to hand the keys to the business over to the people who built it up in the first place.
Starting Fresh
Kessler and Schnell said that their approach since coming into Steaz has been to start from square one and, rather than attempt to trade on existing brand equity, treat Steaz as though they were developing a new company in the modern day.
“What Steven and I said at the end of that first call was ‘if you are willing to let us come back as founders and do all the things that we would do today, as if we still owned the brand, we’re back,” Schnell said.
One of the first priorities was returning to Steaz’s original mission of “business as a force for good,” Schnell said. While being organic and fair trade in the early 2000s was novel, he said those traits are table stakes in the modern natural foods industry and instead set about making Steaz a regenerative organic certified product – the first RTD tea brand in the U.S. to earn that certification – and direct trade, forming a direct personal relationship with the brand’s farm partners.
On the formula, Kessler and Schnell worked to reduce sugar, improve flavor and introduce new SKUs such as Hibiscus.
In their first month back at the business, Schnell and Kessler made sure to meet with existing retail partners – in particular Whole Foods – to strengthen their relationship with buyers and restore confidence in Steaz.
Whole Foods has now approved the Hibiscus flavor to roll out in upcoming resets and the retailer will also help to promote the brand in-store as it launches a refreshed can design in the coming months.
“It has been a highly collaborative effort with Whole Foods throughout,” Kessler said. “The Nova Naturals Steaz management team, who oversee the Whole Foods account on a daily basis, have worked closely with us as we provide guidance and support on the new Steaz direction — ensuring Whole Foods has a clear understanding of our collective vision moving forward.”
For Nova Naturals, the process has also been enlightening, Fransz said. Where many companies might balk at admitting they mismanaged an acquisition, being transparent and open to change has been an all-around positive experience for the business, he suggested.
“The prosperity is not just in serving P&L, the prosperity is also in serving the people that are coming into this community to elevate it to new heights,” Fransz said. “So we’re all on this ride together. Everybody wins.”