Ben Weiss, Founder, Bai Brands

Last week, Bai Brands formally announced a new national distribution agreement with Dr Pepper Snapple Group (DPSG), to bring its Bai 5 brand of coffee fruit-infused drinks into the soda giant’s vast DSD network.

The deal represents the culmination of a relationship that began in early 2012 when Bai first partnered with DPSG for distribution in metro New York, followed by subsequent agreements in Northern California, Texas, and, most recently, Chicago. According to Bai Brands founder Ben Weiss, the brand, given its existing footprint and expected expansion, will be represented at retail in 90 percent of the U.S. by the end of the first quarter of 2014.

Weiss, who has long spoken of constructing a national DSD network for Bai, explained that the deal will vault Bai onto the national stage, particularly with a partner like DPSG, which he said “has a real seat at the table” and “puts a lot more wind in your sails as you look to bring on national chains and satisfy that national footprint.”

“We know together as a team what we’re getting into and how the brand performs at retail and what we need to do collectively to make this the next big breakthrough iconic beverage,” Weiss said. “If I were to do it otherwise, you’re talking about a process that takes a long time. This is not the industry where you have the luxury of really crawling or walking. At some point, you’ve got to sprint.”

Weiss declined to say whether DPSG received an equity stake in the company as part of the deal, saying only that “this a distribution deal with Dr Pepper Snapple Group.”

While Bai’s planned leap from regional to national brand is expected to be quite rapid, Weiss said that the move was years in the making. He noted that Bai has been disciplined in building what he termed as “distribution equity” and understanding how the brand performed at retail, as opposed to a broad land grab as a way to build sales.

“That kind of discipline to DSD is important,” Weiss said. “When we signed our deal with Dr Pepper in New York, we saw the value of that system, and now [are] positioned with the opportunity to go national with retailers, you see the value of using one route to market. It just makes the whole process that much easier and efficient.”

Bai joins Vita Coco as the only other entrepreneurial beverage brand distributed nationally by DPSG, which also carries Neuro and Body Armor in regional markets.

“We have tested the Bai brand in select markets with great success over the last several quarters,” Jeff Conrad, Vice President of Market Development, DPSG, said in a statement. “There is no question that Bai fits exceedingly well with our portfolio of leading brands, and we expect this new choice to be very well received by consumers from coast to coast.”

Regarding Bai’s decision to terminate contracts with distributor partners in favor of a national deal with DPSG, Weiss said simply that “no one wants to lose the Bai.”

Weiss offered what he called “a big, fat ‘no comment,’” when asked how distributors like Haralambos Beverage, among others, took the news.

“I don’t sign deals to break them,” Weiss said. “I love to keep long-standing business relationships. Sometimes, it just doesn’t work out.”

Bai will still have to fill in gaps where DPSG does not operate and is currently in contract discussions with other DSD distributors, Weiss said, including those in Arizona, the Pacific Northwest, the Mountains region and parts of the Carolinas.

From a production standpoint, Weiss is confident that Bai will be able to meet the dramatic leap in distribution. Weiss said that Bai’s production team, led by COO Barak Bar-Cohen, is tasked with ramping up production in the midst of “hyper-growth mode” while maintaining the quality of its products. He noted that while Bai currently works with three co-packers strategically placed around the country, the company will add a fourth and possibly a fifth next year.

Bai, which counts former Vitaminwater CMO Rohan Oza and a number of unnamed celebrities as investors, is in the midst of a new round of funding and in late stage due diligence with two strategic financiers, Weiss said. He declined to name the investors, but did say that neither was private equity-based and that Bai was aiming to close the deals by the end of the year.

Weiss said that Bai has current plans to engage its celebrity investors as endorsers of the brand, however: the company recently brought on Boston-based SapientNitro as its advertising agency of record, and started the process of doing a deeper dive on the brand to “understand its essence,” and what it stands for. The result will be what Weiss called “an unbelievably exciting and unique” approach to marketing that will coalesce in a multi-faceted advertising initiative planned for launch next year.

“We are now defining the brand equity,” Weiss said. “I couldn’t be more excited of where we netted out in that process, and I think we’re going to do it consistent with how we’ve come to where we are now, in a very authentic way.”

Weiss said that the new campaign will roll out to select U.S. cities where Bai is mature and will “certainly amp up the volume” in those markets, which include New York and Los Angeles.

As for Oza’s role in the company, Weiss that although the well-known marketer “has been a consigliore, a great friend and a great resource for Bai,” the brand will not follow the marketing model of others, like Vitaminwater and Vita Coco whose image was decidedly influenced by Oza.

“If I tried to follow that blueprint with Bai, the brand and I will have failed,” Weiss said. “That was never the foundation of our relationship, to follow the Vitaminwater/Glaceau blueprint. Bai is a different experience, a different evolution of enhanced water, and we are going about it in a very specific way, and it starts at retail.”

“All of our marketing, quite frankly, when I call it authentic, is done at the point of thirst,” Weiss continued. “It’s putting a highly relevant brand ambassador that we trained, that we employ in front of the brand and telling consumers what’s so special about it and giving them a taste. And when we do that, the brand and the consumer delivers. It’s a very authentic approach to marketing that has worked for this particular brand and doesn’t follow the blueprint of other successful brands.”