“We were against the ropes many times during the process as it was a very expensive transition; all new suppliers, all new packaging, all new graphics, all new UPC codes, all new specs. But we went to our consumers, retailers and distributors and said , 'Hey, we’re going to relaunch the brand,” he told FoodNavigator-USA in an interview 10 years after setting up shop in San Francisco.
“It was a very tough decision to make but it turned out to be the best one we ever made, as within three years of launching in cans the brand was eight times the size.”
It also served as a reminder that what you think is distinctive about your brand might not correlate with what consumers think, he said.
“We really thought being different [an energy drink in a glass bottle] was our key to growth, when in fact our product [not the packaging] was what made us different; the fact we had an organic energy blend, that we had energy drinks with zero calories and no sweeteners; that we had organic certified energy drinks with half the sugar and calories of mainstream energy drinks.”
And cans just make sense for the energy category, he said: “Now consumers know what our product is at first glance rather than trying to figure out what it is.”
We’re growing at close to triple digits
Today the Hiball Energy brand - which has a strong presence in the natural channel (including national distribution at Whole Foods) and a growing presence in mainstream chains including Kroger and Safeway - is “growing at real close to triple digits” with much of that coming from same store sales growth, said Berardi.
“We’re forecasting next year to be even better as our new cold brew coffee line is performing extremely well, and we’ve also picked up some new distribution.
"We’ve just started with Target and Walmart in tests, which is new for us, and we’re also just starting to get into foodservice, so we have a lot of white space.
“But the big focus for 2016 is to penetrate the convenience store channel now that c-stores are more open to healthier products and natural and organic. We feel like it’s the perfect storm for us, so we’re in talks with some networks for DSD [direct store distribution] but we have yet to align ourselves with any of those networks.”
Getting a DSD network up and running is a challenge to say the least
He added: “Getting a DSD network up and running is a challenge to say the least; you can create your own network, which is time consuming and very expensive; or work with a larger network, but the flip side is that people won’t necessarily have the same focus and desire to grow your brand as you do.”
As for the club channel, he said: “It’s a high volume channel but we’re a premium priced product. I’d say as long as the pricing makes sense we’re interested in testing, but we’re not going to devalue our brand by offering an unrealistic price just to get in there.”
Buyers are actively looking for healthier and natural and organic options
He doesn’t disclose revenues, but the Hiball Energy brand is “worth in the neighborhood of $15-20m in retail sales”, and still only has eight full-time staff, he said. “And miraculously we are profitable, growing rapidly and self-financing that growth sustainably.
“What’s really changed since we started is that buyers at mainstream chains and c-stores, from Kroger and Walmart to 7-Eleven, are now actively looking for healthier and natural and organic options; the market is finally catching up with us. It makes our sales pitch that much easier.
“Now we can go to buyers and say we are the #1 natural and organic energy drink and we have the data to prove it, and that’s huge. And overall, the energy category is performing extremely well. Buyers like it because it’s high margin and high velocity category, so I think more space will be allocated.”
A lot of retailers are also looking to diversify their ranges, he added: “They don’t want another me too product, they want something like Hiball that is premium, high margin, organic.”
Our core consumer is a little older and a little wiser, more of a label reader
So who’s drinking Hiball Energy products?
Not the same people that drink Monster and Red Bull, said Berardi.
“I’d say our core consumer is a little older and a little wiser, more of a label reader; typically aged 25-60, including people that have maybe graduated from Monster and Red Bull and still want energy but are looking for another option.
“As for gender, for the zero calorie unsweetened sparkling energy water, we skew 60% women, and for the organic energy drinks [which contain 5% organic juice and Fair Trade cane sugar, with 39g sugar per 16oz vs 54g for Monster] we skew 60% men."
Cold brew coffee a hit; high protein energy shake launching in 2016; coconut water line being phased out
The firm's new cold brew coffee has been a big success, said Berardi. But the launch of a new high protein energy shake – originally pegged to hit stores this year – has been pushed back to 2016, he said.
“We’ll launch it at Expo West 2016. It’s not easy to get 25g of protein into an 11oz package and still have it taste great six months and 12 months out from manufacturing.”
Meanwhile, Hiball’s organic coconut water energy drink is being phased out, he revealed. “The product has been performing OK but there is no margin in it, as organic coconut water has been really tough to source. Also a lot of people really didn’t really understand what it was; but maybe we can look again at it down the road.”
Beyond energy?
Right now, “our key mission is healthy energy”, said Berardi. But further down the line, other options could be explored: “We’ve looked at moving outside of energy as well. We could do this under the Hiball brand or under a different brand.”