In a statement issued after BevNET revealed Weiss had departed, DPS president and CEO Larry Young did not say why Weiss had left or what his future plans are, but wished him well: “We appreciate all that he has done to build an amazing brand and a phenomenal team, and we wish him well.”
Weiss in turn, said: “This extraordinary brand has been embraced by millions of consumers, and I am confident in its future.”
A spokesman confirmed Weiss had "left very recently," but would not say whether the timing of his departure was unexpected (it comes two months after DPS president and CEO Larry Young noted in the Q1 earnings call that he was "thrilled to death" that Weiss was running Bai within DPS).
Previously executive vice president, human resources at DPS, Hancock has steadily moved up the ranks of the company after joining in 2007, and will work with Ken Kurtz, Bai’s president of sales, to “drive alignment and coordination between Bai and the DPS selling organization,” said the company, which started distributing Bai products in 2013 and took a minority stake in the business in 2015.
Launched in 2009, Bai Brands has grown at a meteoric pace, generating revenues of $5.2m in 2012; $17m in 2013, $120m in 2015, and $231m in 2016.
However, it has not grown as fast in 2017, with Larry Young anticipating full year growth of 40-50% during the Q1 earnings call in April and CFO Martin Ellen noting that the company was now a "little bit less aggressive on expectations for rolling out innovation."
While the 2017 Bai SuperBowl ad (featuring Justin Timberlake and Christopher Walken) had given Bai a "lot of exposure," added Ellen, it was "planned, I will say, a little hurriedly and probably did not allow for the best retail execution planning and in store activity that maybe we would have done differently if we had had our hands on this thing completely from inception of planning on through retail execution."
Tremendous growth potential
From a strategic perspective, Bai has "unlocked tremendous growth potential in high performing categories," for DPS as consumers increasingly seek to avoid empty calories from beverages, said Young.
As for overseas opportunities, Bai is now available in the UK, although it is not yet generating sufficient sales to warrant manufacturing it locally, he added.
"Given that the business is very small currently, as we look to scale the business over time, we'll look for a more sustainable means of manufacturing the product."
Growth opportunities in the c-store channel
Within the US, the c-store channel presents significant growth opportunities for Bai, he said.
Across IRI measured channel data, Bai's volume growth in Q1 "averaged over 40%, and was up over 70% in the highly profitable convenience channel," he added.
"From an ACV standpoint, while we still believe that our distribution [creates] opportunities for the enhanced water product, particularly in convenience, the more sizeable distribution opportunities lie in the other platforms, mainly Bubbles, Supertea and Black."
For example, Bai Bubbles has around 50% ACV in large format stores but only has single digit ACV in the convenience channel, he said.
According to Bai Brands founder Ben Weiss, consumers want to ditch empty calories, but are spurning ‘diet’ products; they want natural foods but won’t compromise on flavor or taste, and are in general looking for new, exciting experiences and brands – trends which all benefit Bai.
But Bai has also grown because it has made good business decisions, he told Nielsen for its 2016 Breakthrough Innovation report:
“I think we did a number of things that were unusual for a start-up. One, we did a lot of consumer research early, and two, we focused on building ‘distribution equity’ as much as brand equity. In my estimation, too many CPG start-ups focus mostly on the product and the brand... They don’t prioritize distribution as a strategic pillar. We did… As a result, we’ve been able to grow at triple-digit rates for five years.”
Its original beverage (Bai antioxidant infusion, originally Bai5) contains a blend of antioxidant-packed coffee fruit and white tea extracts, and is sweetened with stevia extract and erythritol (each bottle has 5 calories).
The brand - which introduced a carbonated version of its flagship drink (Bai Bubbles) in late 2014, and a functional water infused with antioxidants and electrolytes called Antiwater in 2015, followed by Bai Cocofusions, Bai Black and Bai RTD tea - has found success in natural and conventional grocery chains and clubstores, but still has a huge opportunity to grow in c-stores, drugstores, the foodservice channel, and internationally, said Wells Fargo after the sale to DPS was announced in late 2016.
“We believe Bai will be a billion dollar brand by 2020.”
Watch the Bai Super Bowl ad: