The health benefits of antioxidants are still highly debated in the scientific community, but the financial benefits of selling them has been proven beyond all doubt, as Dr. Pepper Snapple Group has snapped up Hamilton-based Bai Brands, a maker of health drinks, for an all-cash price of $1.7 billion.
Ben Weiss founded the company in 2009 in his Princeton home office. Weiss, who had experience in the coffee business, had noticed the industry was throwing away the fruit that coffee beans come from. Weiss saw an opportunity to use the coffeefruit juice to infuse beverages. The juice was high in antioxidants, which had become a highly sought after ingredient in the health food business. (U.S. 1, January 8, 2014.)
After creating three flavors of drink, Weiss and his father put cases of them in the trunk and knocked on the doors of Princeton retailers.
The odds were stacked against Bai from the beginning. As Weiss told U.S. 1 in a 2014 interview, about 2,000 new products come onto the market every year in the drink industry. Each must compete for valuable shelf or cooler space against more established competitors. Retailers keep only the drinks that sell well.
Fortunately for Weiss, his product found a warm welcome on the store shelves of Princeton. He watched as his products rose from the bottom shelf of local stores to the coveted eye-level spots. “There are times when this brand’s performance in retail is unprecedented — and that is the support we get from the Princeton community,” he told U.S. 1. “Why is this brand about to become a national success story? It is due in large part to the fact that Princeton as a community allowed me to incubate the brand.”
The incubation period didn’t last long. The brand soon found success with drinks like Tanzania Lemonade Tea, Molokai Coconut, and Sumatra Dragon Fruit, and moved into a headquarters on East State Street in Hamilton. By 2013 Bai had $20 million a year in revenue. A nationwide distribution deal along with a $15 million investment by Dr. Pepper followed the next year, allowing Bai to scale up production to 60 million drinks a year.
The purchase comes at a time when sugary sodas are under fire for helping cause obesity and diabetes. Philadelphia, Berkeley, California, and several other cities around the country have imposed taxes on sugary drinks to discourage them. Soda sales have been declining nationwide and have plummeted among children and teens, according to federal researchers. In this environment, soft drink makers like Dr. Pepper are looking for ways to expand their offerings of low-sugar beverages.
In 2014 Weiss told U.S. 1 his product represented “the evolution of enhanced waters,” with his core market being what he likes to call “the healthy activist … I like to say it is a mindset more than a demographic — people who are actively looking for an authentic and healthier alternative than what they are presented with in the cooler today.” His products, he says, attract people who “want something that delivers health with very little sacrifice,” which brings in people who also drink tea, coconut water, lemonade, and juice.”
This emphasis on health beverages appealed to Dr. Pepper Snapple.
“Bai is one of the fastest growing beverage brands,” Dr. Pepper said in a press release. “The company’s product portfolio spans across several high-growth beverage categories including enhanced water, carbonated flavored water, coconut water, and premium ready-to-drink teas. With its Bai, Bai Bubbles, Cocofusion, and other innovative brands, Bai is positioned for expanding growth in key beverage segments. These highly profitable categories are projected to continue to grow worldwide for the foreseeable future. The acquisition of Bai will further enable us to meet growing consumer demand for better-for-you beverages.”
Weiss will continue to lead Bai Brands within the Plano, Texas-based Dr. Pepper Snapple company, and a Bai spokesperson said the headquarters would remain in Hamilton with no layoffs planned.
Bai Brands, 1800 East State Street, Hamilton 08609. 609-586-0500. Ben Weiss, CEO. www.drinkbai.com.