Bai Brands CEO: ‘Sales will hit $50m in 2014, but there were ‘unsexy’ years’

Speaking on a 'Beverage Buzz' conference call organized by Wells Fargo Securities, Weiss was interviewed by Bonnie Herzog, who leads that firm’s Beverage, Tobacco and Convenience Store research arm.

Bai Brands’ main brand is Bai 5, a low-calorie water enhanced with antioxidant rich coffee fruit, and sweetened with erythritol and stevia, which became part of DPSG’s distribution network last year and secured slots in Target and Safeway.

In 2012 the company turned over $5.2m, in 2013 $17m, and Weiss says Bai is on track to score $50m in sales for 2014, while the brand is tracking a $100m target in 2015.

‘We never lean on sugar to taste good’​

Weiss explained he and his father developed the drink in their basement and hawked the drink out of the trunk of his car in Princeton New Jersey, with the first case sold in August 2009.

“We are a beverage that never leaned on sugar to taste good, and we’ve figured out how to make what I consider ultra low calorie taste really good,”​ he said.

The good taste of Bai 5, which encouraged repeat after trial, enabled the brand to focus on distribution equity at the expense of brand equity, Weiss added.

“It allowed us to be very disciplined and focused on building…distribution equity at the expense of brand equity, which is a very tough thing to do in the beverage business because it’s very crowded,”​ he said.

“You want to scream from the rooftops about your brand,”​ Weiss said, but Bai stuck to the discipline of focusing on distribution, and how the brand performs at retail.

“Those were really kind of unsexy years. But we really cherish those years and we really embrace them and understood the importance of building distribution.”​

From minor to major league – the DPSG deal​

“Five years later the brand is hitting its tipping point here, and for the first time did spend some money on advertising in New York – we’re realizing that there is great payoff to that discipline.”​

Then came the big break. Around a year ago Bai signed a distribution deal with DPSG, which catapulted it into the big league – from being what Weiss says a “very regional player”​ in the Northeast to a brand that, at the time of writing, is now activating national accounts.

Weiss gave DPSG a lot of credit in terms of the market launch of Bai Bubbles – a lightly carbonated version of Bai – which he described as a “minor miracle”​. Bai Brands approached its bigger peer in August about a New York launch, and the new line hit the shelves in October.

“Bai Bubbles is early, but…what I’m seeing…is a completely incremental business that’s driving a different consumer to our brand. And we literally became a portfolio of products overnight, not just a good product,”​ Weiss said.

He told Herzog that he wouldn’t rule out selling to DPSG or another company, but said the current focus was on going it alone, planning for 2015 “which is going to be the big year for Bai”.​