However now Mr. Steltenpohl, a mild and avuncular 62, is as soon as once more close to the middle of beverage trade buzz as the top of Califia Farms, a nut milk enterprise that's quick increasing into bottled coffees and different drinks. This time, he takes benefit of a brand new pattern sweeping the trade, as younger beverage firms — empowered by adjustments in distribution and client tastes — are rising and competing efficiently with titans like Coca-Cola and PepsiCo.
At the moment it's attainable for an organization to develop a drink and minimize a cope with an meeting line for rent to provide it, and negotiate one other deal for somebody to distribute it. Only a decade in the past, it required way more capital and, ultimately, a sprawling operation.
Just a few years after its founding, in 2012, Califia is on observe to ring up $100 million in gross sales and is including merchandise at a quick clip. The corporate is taken into account one of many hottest younger manufacturers within the beverage world, resulting in whispers about whether or not one of many huge opponents will quickly swoop in with a buyout supply that Mr. Steltenpohl and his companions can't refuse.
Not this time, he insists. "I've needed to promote out as soon as," Mr. Steltenpohl stated. "That was sufficient."
That's simpler to say than to do. Slightly greater than a month in the past, Ben Weiss, the founding father of the flavored water firm Bai, additionally brushed again discuss of a buyout. "It's known as Bai, not Promote," he stated in an interview on the time.
His argument was not distinctive today. He had already teamed as much as a level with one competitor. The corporate's drinks, which it known as "enhanced waters," obtained some distribution from Dr Pepper. And Bai was outselling a competitor in retail shops: Over the earlier 12 weeks, Bai had outsold Vitaminwater, a Coke model, for the primary time, Mr. Weiss stated.
It was on observe for $300 million in annual gross sales, outselling Pepsi and Coke on Amazon, web gross sales that assist many younger beverage firms prolong their attain to far corners of the nation with out large distribution networks.
However on Nov. 22, all that independence went up in smoke as Dr Pepper introduced that it was shopping for Bai for $1.7 billion. The identical day, PepsiCo introduced its acquisition of KeVita, which makes probiotic drinks.
There are extra alternatives for younger drinks firms than ever, as customers who've deserted sugary and food regimen sodas seek for options to plain water. Trace Inc., as an illustration, is on observe to ring up $90 million in gross sales this yr, having leveraged its early distribution in Google's cafeterias into shelf house at Complete Meals, Goal and different shops.
Final month, Cason Thorsby, a newly minted entrepreneur in Detroit, started promoting in eating places, bars and groceries there a line of sugar-free, naturally flavored, "superinfused" sodas branded along with his first title. And new juice companies like OnJuice, Misfit Juicery and Roots Juices, a lot of which begin out promoting their merchandise on-line, come to life each month, or so it appears.
Duane Stanford, the editor of Beverage Digest, stated a younger beverage firm at the moment should purchase its flavors from a taste home, branding experience from a branding knowledgeable and manufacturing from a producer on contract.
"You've this case the place these firms can turn out to be viable, strong, cash-generating companies with out the assistance of an enormous firm," he stated. "They're even getting artistic at constructing impartial distribution networks."
Odwalla got here collectively out of a necessity to eat. After graduating from Stanford with a level in environmental sciences, Mr. Steltenpohl joined with some mates to start out a band known as the Stance. He additionally obtained hooked on the style of fresh-squeezed orange juice, which his father made for him.
"We have been a band of musicians who weren't actually that achieved — or well-liked," Mr. Steltenpohl stated of himself and the band members, who turned his companions in Odwalla. "We have been broke and ravenous, and we figured if we began a juice enterprise, we might dwell off the juice and perhaps make just a little further."
He learn a e-book, "100 Companies You Can Begin For $100," and the companions invested in a juicer and began making juice. They didn't even attempt to break into groceries and comfort shops, as an alternative stocking fridges in video shops and laundromats with Odwalla recent juice every day. "Everybody who was a musician again then was principally residing out of a VW bus," Mr. Steltenpohl stated. "We give up residing in ours and commenced promoting juice out of the again."
For many of its early years, the Santa Cruz Group Credit score Union financed the corporate. However as customers cottoned on to its intensely flavored, wacky mixes of unpasteurized juice, it wanted one thing extra.
A pal launched Mr. Steltenpohl to Invoice Hambrecht, a founding father of Hambrecht & Quist, the funding financial institution that financed a few of Silicon Valley's early start-ups. Hambrecht & Quist turned Odwalla's first institutional investor, and Mr. Hambrecht started serving as a form of consigliere. "He helped us perceive that anarchy isn't the perfect enterprise mannequin," Mr. Steltenpohl stated.
In 1993, Hambrecht & Quist helped take Odwalla public, which allowed it to develop nationally and into Canada. By 1996, it had roughly $60 million in gross sales, a brand new plant and refrigerated supply vehicles to interchange the VW vans.
Then the music stopped.
"I obtained a name from the King County division of well being," Mr. Steltenpohl whispered, tearing up on the reminiscence. "5 or 6 individuals in Seattle had come down with what regarded like E. coli poisoning, and the frequent component was apple juice, our apple juice."
Ultimately, at the least 66 individuals obtained sick after consuming Odwalla juice, and a baby died. The model's claims concerning the healthiness got here again to hang-out it as reporters dug into its failure to heed warnings about food-safety lapses.
Odwalla ended up within the arms of personal fairness teams, and when it turned obvious that the aim was to promote the corporate to Coca-Cola, Mr. Steltenpohl left.
"For Coke, the considering was recent juice is turning into necessary, we'd like a recent juice, Odwalla will fill that want," he stated. "They by no means noticed the large potential of the Odwalla model and as an alternative noticed it as simply one other product within the juice portfolio."
(Scott Williamson, a spokesman for Coke, stated that Odwalla is a vital a part of what the corporate calls its "pure wholesome drinks portfolio and that Coke would proceed to put money into advertising and new merchandise to develop the model.")
Mr. Steltenpohl then teamed up with Dee Hock, the founding father of Visa, and began a fee system that rewarded loyalty to native companies.
Then he collaborated with an African entrepreneur to develop Adina, a hibiscus tea enterprise now owned by a Mexican beverage firm. "It was a fairly formidable challenge to supply hibiscus from a girls's co-op in Africa and make it into teas," he stated. "There was quite a lot of prejudice, and it was troublesome to get any margin on the product — it was so idealistic."
In 2010, Mr. Evans, the proprietor of Solar Pacific, a California citrus producer, was on the lookout for somebody to make juice out of misfit Cuties, the tiny, easy-to-peel mandarin oranges that had introduced new life to citrus gross sales. About 20 % of the fruit had blemishes or seeds or another disqualification, and Mr. Evans employed Mr. Steltenpohl to "discover a approach to become profitable out of it."
Mr. Steltenpohl was charged with constructing and working the plant that might squeeze the misfit fruit into juice. However simply as development started on the plant in Bakersfield, Calif., Mr. Evans's companion in Cuties, the agricultural group now generally known as the Fantastic Firm, backed out. "With out its clementines to run the plant, we couldn't run it effectively," Mr. Evans stated. "In different phrases, we overbuilt the plant."
So Mr. Steltenpohl returned to an concept he had toyed with a few years earlier than.
Shortly after the E. coli contamination, Odwalla had tried promoting a product known as Future Shake that was constituted of almonds, oats and soy. However its texture was too thick, and it by no means took off.
Extra not too long ago, Mr. Steltenpohl had watched the rise of WhiteWave, the soy and nut milk juggernaut, and Mr. Evans had connections with almond growers. He and Mr. Steltenpohl had determined to make use of the plant's extra capability to make almond milk when Mr. Steltenpohl discovered he would wish a liver transplant.
"At that time, I actually wasn't considering of returning to the corporate in any respect," he stated.
However after the surgical procedure, the hospital gave him a protein beverage to assist in his restoration, and the elements in it have been so unhealthy that he determined he needed to make Califia work.
The primary batch of almond milk rolled off the manufacturing line in 2012 and rapidly took off.
The product had the benefit of its personal manufacturing facility and what Mr. Steltenpohl had discovered about distribution whereas at Odwalla. It additionally had the benefit of a far totally different retail panorama. When the Odwalla disaster hit, Amazon was in its infancy, and Complete Meals, which frequently serves as a form of ambassador for brand spanking new meals and beverage manufacturers, had only a handful of shops.
At the moment, Amazon is placing up its personal grocery shops, and Complete Meals has practically 500 shops. On the similar time, comfort shops have turn out to be a lot greater factors of distribution for all kinds of drinks.
And customers are abandoning conventional delicate drinks, each sugared and food regimen, in droves and looking for new flavors delivered in new methods.
Within the final yr, Mr. Steltenpohl has pushed almond milk drinks flavored with issues like ginger, mocha and matcha. Extra not too long ago, Califia is placing the almond milk into cold-brewed and nitrogen-infused coffees, a method borrowed from the beer enterprise. The nitrogen imparts a sweetness to espresso, serving to to cut back the quantity of sugar wanted. In keeping with information from Euromonitor, bottled espresso is likely one of the quickest rising beverage classes in America, and Califia's cold-brewed model outsells the packaged Starbucks model.
Mr. Steltenpohl can be attempting to keep away from previous errors. The plant is supplied with cutting-edge food-safety screens that share alerts about issues as they occur with all the senior administration crew. Josh Butt, who beforehand oversaw meals security techniques at Danone, the massive French dairy firm, presides over the plant's operations.
Within the yr ended Sept. four, Califia's gross sales greater than doubled, hitting $85 million, in response to information from IRI, which doesn't embody the bottled espresso.
In different phrases, the corporate is large enough to be engaging to a bigger participant.
"As for big-brand curiosity, it might be correct to say there has already been substantial curiosity — however as I've stated, I actually don't wish to go that route of promoting whereas the corporate is so comparatively younger," Mr. Steltenpohl stated. "Discovering methods to proceed to develop the corporate into a significant model with a excessive diploma of independence is a significant lifelong goal."
Non-public fairness teams have additionally come calling. One yr in the past, the Stripes Group, a Manhattan-based non-public fairness group that has a stake within the meals supply service Blue Apron, amongst different companies, put up $50 million for rather less than 20 % of Califia's inventory, giving the corporate a worth of greater than $250 million.
Mr. Steltenpohl and his govt crew have choices giving them the correct to as a lot as 1 / 4 of the corporate, and Mr. Evans owns the remainder — a majority of the enterprise — however "it's actually Greg's firm," he stated, including that he was in no hurry to exit his funding. (Mr. Evans declined to touch upon whether or not he earned cash from the Stripes Group transaction.)
That stated, the tried-and-true endgame of promoting out to an enormous competitor might show too inviting, significantly within the wake of Danone's buy of WhiteWave this yr.
The benefits that deal dropped at WhiteWave have triggered some sleepless nights for Mr. Steltenpohl, despite the fact that gross sales of his competitor's almond milk have been flat. Danone has the wherewithal to pay slotting charges to supermarkets to bump merchandise into prime positions on the refrigerated cabinets, no matter how properly they're promoting.
"That makes it more durable for us youthful canines," Mr. Steltenpohl stated.
However he stated chains like Goal and Kroger are relying extra on what he known as "reality primarily based" evaluation to find out the place they put merchandise on their cabinets. And he hints that Califia will introduce a "cultured product" a while subsequent yr — learn: one thing probiotic. Which can simply give Danone purpose to look at its again.
Proceed studying the principle story
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