Ben Weiss has grown a soft drink company from a home office startup to a nationwide empire, all by finding a use for something that everyone else was throwing away.
Non-carbonated drinks made by Bai Brands, which is based at 1800 East State Street in Hamilton, have been on the shelves in New Jersey for several years and are poised to make a leap to nationwide distribution following a deal with Dr. Pepper. Weiss’s fast-growing company sold its first case of coffee-fruit beverage in August, 2009, and four years later has sales of $20 million a year, with about 66 fulltime employees and more than “300 brand ambassadors” who independently promote the brand.
The story of Bai Brands goes back to the early 1990s, when Weiss found his true love: coffee. In 1992, fresh out of Boston University with a degree in finance, Weiss did the expected — he put on his blue suit and white shirt and went to work for a bank. “I did it for year, knowing it was not where my passion lay,” he says. “Then I started my love affair with coffee.”
Aware of the new wave of coffee coming through the Pacific Northwest and California, he fell in love with the industry. At 22, he began an intensive study of the coffee scene in Europe, backpacking his way through Switzerland, Italy, and France. “I wanted to understand this product,” he says, “and I fell in love with the coffee house. I wanted to bring some of that culture back into the U.S.” This was about the time Starbucks was taking off, but the phenomenon hadn’t yet hit the East Coast.
Weiss had an idea for the coffee space and some investors lined up, but the idea didn’t pan out, and he wound up working for Godiva Chocolatier, helping them to develop their coffee line, in particular a product called Chocolixir. The drink was a frozen coffee beverage that he says enabled people to “enjoy Godiva ‘indulgence’ through a straw.”
“It turned out to be a big hit for Godiva, in a very counter-seasonal way,” Weiss says, explaining that with no gifting holidays in the summer, chocolate sales decreased, and this product brought traffic into Godiva stores. “They were able to get an 18-year-old male demographic to purchase a beverage and walk out with Godiva chocolates for their mothers and girlfriends,” he says.
He then worked for the micro coffee roaster Font, where he learned the art of roasting and distributing coffee.
“This brought me to my ah-ha moment five years ago,” he says.
The marketing magic of Bai Beverages lay in antioxidants. Scientists are studying whether consuming substances rich in antioxidants can help prevent certain diseases, or whether they improve health by fighting oxidative stress, which is thought to contribute to aging. Although the science is still inconclusive, the enthusiasm of food manufacturers about antioxidants has outpaced the research, and many health foods and drinks are advertised as containing them.
What Weiss found was a fresh source of the highly sought-after ingredient. “While coffee is being harvested in far-away places, the coffee fruit that protects the coffee typically gets thrown away. A harvested superfruit, rich in polyphenol antioxidants — it was literally used as compost,” he says.
Having spent his career in coffee, Weiss knew that indigenous people used it to brew teas and beverages. He was also aware that coffee fruit was an ingredient in cosmetics due to its anti-aging and antioxidation qualities and was also available in capsule form as a nutraceutical. “As I saw it starting to be recognized in those mediums, I was going to use it in a functional beverage,” Weiss says.
About five years ago, he set out to use this coffee fruit to create antioxidant infusions. He describes his Bai product as enhanced water, with only five calories per eight-ounce serving. “Usually when we drink something good, it is 100 percent juice, which is fattening,” he says.
Another issue with many beverages on the market is that they have too much caffeine, and Weiss is not a fan. With coffee fruit he was able to create a beverage with a “responsible amount of caffeine.” The coffee fruit itself contains minimal amounts, Weiss says, but “I felt, coming from the coffee/caffeine culture, that caffeine is something that Americans are looking for in a beverage; if used properly and responsibly, it is effective.”
They decided on 70 milligrams of caffeine per bottle, or 35 per serving, but were also careful about where that caffeine comes from. If you see caffeine in the ingredient deck of a drink (which is not so with Bai), Weiss says, what is being added is “a synthetic version of caffeine that is created in a lab.” When coffee is decaffeinated, he explains, the caffeine that is stripped away is sold to people to be used as an ingredient in other foods.
Bai gets its caffeine from coffee fruit and from another naturally caffeinated substance, white tea. “White tea is unadulterated, not denatured, much like coffee fruit,” Weiss says.
“The result is, from a consumer perspective, that it does not get you jacked up, hypercaffeinated,” he says. “But it is a useful amount of caffeine that gives you some clarity.”
Creating a beverage from coffee fruit also meant finding ways to mask its bitter taste — “It’s not like you sit and eat a coffee fruit like a cherry,” Weiss says. But the art of beverage creation has to do with balance. “When you make a beverage or just mix drinks, there are things that give off good notes and things that give off off notes,” he says. In fact, he adds that the coffee fruit helps offset the off notes that come from sugar substitutes.
As to the origin of Bai flavors, Weiss says, “There is no rhyme or reason to how we create flavors at Bai other than I get these kind of urges.” Recently, for example, when he was stocking shelves at an account, he noticed a proliferation of Arnold Palmer drinks, which are a half-and-half mixes of iced tea and lemonade. “This is a popular drink among many brands, but you are consuming calories and sugar,” Weiss says.
So he created Tanzania lemonade tea, which has one gram of sugar, comes in at five calories total, is 100 percent natural, and is “packed with antioxidants from the fruit of the coffee bean. We entered that category in the Bai way, delivering it without all those costs usually associated with coffee beverages,” Weiss says.
The origin of Molokai Coconut was because Weiss found existing coconut waters undrinkable. “They didn’t have a mainstream taste profile,” he says. “It’s not what your taste buds expect from coconut.” The flavor he created, packed with electrolytes, has been one of his most successful new product launches.
Because Americans seem to love fruity red drinks, he created Sumatra Dragon Fruit. Sometimes ideas come from Bai’s Facebook fans, which happened with the new Kona Watermelon drink. He also came up with Limu Lemon, a lemonade for kids without the sugar overload.
“I’d love to say we use focus groups, but we are very entrepreneurial and very nimble when it comes to creating beverages,” Weiss says. “The reality is I come up with ideas and work closely with our food scientist.” As the company grows, he is finding it easier and easier to make beverages. “We have our base recipe down, and now it is a matter of filling the voids in the lineup.”
Weiss sees his product array as “the evolution of enhanced waters,” with his core market being what he likes to call “the healthy activist.” Says Weiss: “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, lemonade, and juice.
When Weiss created the first three Bai flavors, he and his father put cases of them in the trunk and knocked on the doors of Princeton retailers. They would all give him a shot — Olives, Nassau Seafood, D’Angelo’s, the Kiosk, the U Store, Chez Alice. “Local merchants embraced the brand because I was one of them; they gave me an opportunity in their coolers to fight it out alongside other brands,” Weiss says. “The success early on made me very confident this product had the potential to be a breakthrough brand.”
Each year about 2,000 new products enter the beverage space, Weiss says. When a product occupies a space on a shelf in a cooler, it is at the expense of another brand. “If you are going to maintain the space, the consumer has to pull the product off the shelf,” Weiss says.
“Usually a product starts on the bottom shelf off to the side,” Weiss says. “When you do well, you start warranting primary shelf space and the brand sticks and a retailer wants the brand in there.”
As the Bai brand started to perform, the allotted shelf space increased and its cooler location improved. “They can do 3,000 units a week for which the consumer can pay a premium, which makes it a top seller in the store,” says Weiss, who uses the successful performance of Princeton retailers as a model for his sales teams around the country.
In Whole Foods Bai flavors are often among the top 10 in product revenue in the stores, notes Weiss. “There are times when this brand’s performance in retail is unprecedented — and that is the support we get from the Princeton community,” he says. “They have helped us find the potential for this brand on an ongoing basis, and I’m talking not just about merchants but also about consumers. 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.”
What Weiss needed to do next was to test the concept in a big-city environment, which he did in New York, focusing on health food stores “to see what hard-core health enthusiasts think of this brand and see if it lives up to expectations.” At first, it was a matter of going door to door, but once the brand started to make a little noise — in October, 2010, a little over a year after it sold its first case — it caught the eye of distributors.
“We ultimately got the chance to get aggressive in New York with Dr. Pepper Snapple,” Weiss says. “To scale in this industry, which crosses over so many different distribution channels, you’ve got to engage distributors, and the trick is to maintain their share — they have other brands that pay the electric bill and you are trying to make a name for yourself.”
Indeed over the past year they did just that, growing 400 percent in select geographical areas: from Maine through Virginia, and California. The national distribution deal signed with Dr. Pepper Snapple in November will bring Bai into retailers like Jewel-Osco, Stop & Shop, Duane Reade, and Safeway, plus more than 100 additional Costco stores.
The company got its start in Weiss’s home in Princeton. He had moved to the town to raise a family, and his parents followed. His startup stayed a home business for its first two and a half years. When Bai started to scale up, Weiss needed more office space and signed the lease at 1800 East State Street, a building known as Studio Park.
Describing it as a “cool, industrial, mill-style building, with lofty warehouse/office space,” Weiss says, “It had great character and was not far from the Hamilton train station. It felt like it really fit the vibe of our brand.” Over the last two years he has grown from 3,500 to 33,000 square feet and is bursting at the seams.
All of Bai’s coffeefruit comes from Indonesia. “We have an exclusive relationship with a facility where they purchase the fruit from coffee farmers, then extract it into powder form, and we bring it here,” Weiss says. The coffee farmers, who would typically throw away the coffeefruit once it is separated from the bean, now have a secondary source of revenue by selling it to Bai. The company does not use importers or brokers.
With select retailers and select geographies, Weiss says “we are confident in scaling up and introducing it to other markets.” He says scaling up poses its own challenges: handling growth, ensuring that demand is met, and supporting new markets with sales and marketing people.
Now Bai is approaching big retailers. This month he is expecting a prominent retailer to roll out the company’s products in all its locations.
Weiss grew up in Staten Island. His parents were in new home construction, but now both work for Weiss. His father is responsible for regional sales in the Princeton area and his mother, community relationships in Princeton. In this area all the major retailers sell his brand, and he is very appreciative. “I want to make sure we are tethered to Princeton as we grow nationally.”
Outside of Bai, Weiss says, “My family is my life.” This includes his wife, Dana, and two children. “Running a business that has this kind of success behind it, the wind at its sails, requires a major commitment, and they are very much a part of this whole experience,” he says. “Every minute I’m not working, I’m with them; I’m not trying to hit the gym and take care of myself.”
Noting that he has the best job and best family in the world, he says it is hard to separate the two. “We’re a passionate group here and part of what makes us so authentic is we are run by real people who have real families,” he says. So he does manage to coach an occasional baseball game and take his daughter to the gym.
Weiss expects the company to do close to 5 million cases next year. “Whenever you are putting out 60 million bottles, I would be lying if I tell you it is not riddled with challenges,” Weiss says. “We have a lot of smart people making sure we have quality product and are never short on availability.”
But he is not too concerned. “We have always prepared for our success, and it doesn’t take us by surprise,” he says. “We knew that this brand is in scale-up mode way before we signed the Dr. Pepper Snapple deal. Everything we do has redundancies and we prepare intensively. In scale-up mode everything is a challenge, and we’ve got to accept that, but there is no reason to think we can’t produce product to the tune of our sales trajectory, which is pretty steep.”
Bai Brands, 1800 East State Street, Hamilton 08609; 609-586-0500; fax, 609-586-0900. Ben Weiss, CEO. www.drinkbai.com.