All-natural and 'responsibly caffeinated'. How Bai hit the sweet spot in the functional beverages market

“In the beverage industry, there are no barriers to entry and a lot of participants,” ​said Weiss in an interview with FoodNavigator-USA. “It’s a tough market;  roughly 1% break through. But Bai will do $20-plus million this year. We’ve broken through clutter. And we did it by winning at retail.”​

One industry’s byproduct…​

Through his travels to Indonesia to source green coffee over two decades working in the coffee business, Weiss was no stranger to the process of coffee production. But it wasn’t until he took a second look at a byproduct of the coffee harvest—the antioxidant-packed coffeefruit that encases the coffee bean—when he had his “ah-ha” moment.

“The fruit literally will get thrown away. And I thought to myself, ‘I’ve seen it used in cosmetics for its antioxidant capacity, why not beverage?’ So I had this idea to take a byproduct of the coffee harvest and use it as a functional ingredient. It had never been done before. Although coffeefruit is an irrelevant part of coffee harvest, it was a very relevant idea,” ​he said.

Weiss spent roughly a year tinkering with the formula in his Princeton, N.J., home, finally settling on a line of all-natural caffeinated beverages blending coffeefruit with other fruit juices, such as blueberry, pear, pomegranate and mango, along with hibiscus and beetroot extracts for added color and flavor.

Given that the market for energy drinks was peaking in 2009 and vitamin-infused water was on the decline as consumers sought more nutrient-packed beverage options, Weiss saw the potential for an all-natural, “responsibly caffeinated” beverage that was loaded with antioxidants. He chose the name Bai, which is Mandarin for “pure.”  

“I looked at the market and asked myself what the most relevant category was, and that was energy drinks,”​ Weiss said. “What makes energy drinks vulnerable? Concerns about hyper-caffeinating. So we created a responsibility caffeinated, all-natural beverage. The brand was well-positioned and on trend, and it was quickly confirmed that consumers were buying into the antioxidant message.”​

Finding the soul of the brand​

Initially, Weiss downplayed the coffeefruit in the product in order to target the widest possible audience. “We thought coffeefruit could be alienating because some people don’t drink coffee. So we always buried the message of coffeefruit early on. Consumers seemed intrigued enough by Bai to grab it off the shelf. Once they drank it, liked it, and turned the bottle over, they would go, ‘Coffee is a fruit?!’ The message was not forced on them; they discovered it on their own.”​

Every time customers interacted with the brand, they could discover something new—from the meaning of the word “Bai” to the source of the coffeefruit, “where the best coffee in the world is grown,”​ to the company’s direct trade relationship with the farmers in Indonesia. “I would describe all of those things as the soul of brand,” ​Weiss said, noting that this approach has enabled the company to attract business without spending too much on marketing.

“Bai becomes interesting and relevant in addition to tasting good, and you talk to your friends about it. It stimulates repeat purchases and attracts new customers, and it gives the brand a fighting chance.”​​

Creating a blueprint​

Weiss sold the first case of Bai in August 2009 and quickly expanded the line to include a five-calorie, low-sugar version called Bai 5. The company held its first fundraising event a few months later, getting investments mainly from family and friends. But the decision to launch the brand in Costco put Bai on the map.

“Usually new market entrants will start with mom-and-pop stores, then move up through convenience, grocery, mass, club, etc.,” ​Weiss said. “Club chains are usually the last place you wind up. But we launched our brand in Costco.”​

The brand took advantage of Costco’s five-day roadshow events to get the product into consumers’ mouths and grow awareness.

“The roadshows are intense because you’re there 10 hours a day, pitching, pitching, pitching—but the upside is, you get to put your product to 20,000 mouths per store. It’s great marketing.”​

One unexpected benefit (and something of a stroke of luck) was that Costco’s market influence got Bai early entry into grocery chains. “Grocery chains look at Coscto because it is kicking their butts in a lot of ways,”​ Weiss said. “Because we have been well-received by Costco, we’re now a fairly big brand in grocery chains. Most young brands don’t get to play in grocery as early as we have.”​

Bai applied the “just sell it” approach used in Costco to other channels and markets, which enabled it to establish authentic repeat business and a blueprint for success.

“We didn’t put up any billboards. All our marketing has been close to the consumer, through demos and sampling,”​ Weiss said. “We figured out what the brand needs to do in New York, which is quite different from Maryland, Boston and California. We also figured out pricing, adjacencies and that we need to be creative on the floor with displays. You have to put resources against the market you’re in and establish a blueprint. I can go national with confidence now that I have a blueprint that I can show to retailers.”​

Indeed, the brand just signed a distribution deal in Chicago and will be nationally distributed by the end of the year.

 ‘Ours to screw up’​

Weiss likes to joke that he and his team don’t say “goodbye” at the end of a conversation; rather, “we got the buy,”​ which he says is a gentle reminder that the “buy” is what made the product successful, and it’s up to them to sustain that success in a beverage marketplace that sees 2,000 new entrants every year.

“What motivates me is I think the next 'buy' is being invented right now in someone’s basement. We have a product that works, a product that gives the business a real shot at being successful. At this point, it’s really ours to screw up.”​