Beverage startup Bai has gotten astronomical amounts of attention since its founding just over seven years ago.
Bai, or “pure” in Mandarin Chinese, is in the sweet spot of the beverage industry with a focus on natural and healthy products based on the coffee fruit—once a discarded byproduct in the coffee industry.
The growth of the Princeton, New Jersey-based company isn’t going unnoticed. On Wednesday, a news report said Bai was in talks with Dr. Pepper Snapple (DPS) to sell. Dr. Pepper, which has owned a minority stake in the company since last year, also has a distribution deal with the company. These rumors followed news reports from earlier in the month, citing sources that claimed Bai was exploring a potential sale with Coca-Cola (KO) or Pepsi (PEP).
Founder and CEO Ben Weiss told Yahoo Finance that the company, which posted $120 million in sales in 2015 and is targeting $300 million this year, is focused on growing further… on its own.
“The name is Bai, not sell,” Weiss said. “Great companies are bought, they’re not sold. And Bai is not for sale.”
Weiss said the company has higher aspirations than being part of a portfolio.
“We’re trying to change the industry,” he said. “We’re not trying to just create another beverage that fits into a portfolio. We truly feel we’re the total beverage solution, and that’s an audacious thought. And that at times is something the industry doesn’t know what to do with. But we’re determined to be that next generation of beverage for what I call the ‘smart age consumer.'”
The company’s aspirations contrast with tepid growth in the carbonated beverage industry.
Takeover rumors amid a troubled beverage industry
Takeover rumors for hyper-growth Bai come as the carbonated beverage industry experiences secular decline, with industry behemoths shifting their strategy to cater to more health-conscious consumers.
Earlier this month, Pepsi Chairman and CEO Indra Nooyi announced a global target for sugar reduction by 2020.
And in its third-quarter report on Wednesday, Coca-Cola highlighted a need to continue to shift focus to bottled water, tea and ready-to-drink coffee to counter lackluster carbonated beverage sales, where it is working to reduce sugar.
Investments and acquisitions have been part of this shifting strategy for the beverage behemoth. Coca-Cola acquired Vitamin Water for $4.1 billion in 2004 and later focused on building stakes to diversify away from its core offerings. In early 2014, it acquired a 16% stake in Keurig Green Mountain, which was later acquired by JAB Holding investor group; it also bought a 17% stake in Monster Beverage (MNST) for $2.15 billion in 2014.
Weiss explained the major names in the beverage industry aren’t developing new portfolios that cater to today’s consumers, leaving an opportunity for his company, which he said answers the diet dilemma of good taste, good health, and no artificial ingredients.
“[The beverage industry] doesn’t innovate. It allows people like me to innovate,” he said. “I think the industry should embrace a total beverage solution….That is where all the consumers are headed.”
Bai started by appealing right away to the masses, Weiss explained. Instead of being incubated in the Whole Foods (WFM) of the world, the company was launched in Costco (COST) club stores.
“We became a club, grocery, mass type brand before we even hit convenience,” he said. “With our innovation and with the dilemma the industry is facing—and we have the answer to that dilemma—I anticipate triple digit growth for the years to come.”
Marketing push
The company has recently teamed up with Justin Timberlake, who will serve as its new “Chief Flavor Officer.”
“He is in so many ways our customer—he is what I call the ‘conscious authentic,” Weiss said. “He also happens to be one of the most creative people I’ve met… he’s really going to have a hand in innovation and in marketing the brand going forward.”
“Bai, bai, bai”—a new take in NSYNC’s classic—just may be the tune many consumers hear in the coming years.
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