Finishing its second round of fundraising in less than a year, fast-growing Essentia Water announced this morning that it had reached a deal to sell a partial ownership stake to private equity firm Castanea Partners. First Beverage Ventures, the private equity fund run by First Beverage Group, was also an investor in the deal.
Essentia CEO Ken Uptain would not comment on the amount raised by the company in the transaction. Under the terms of the deal, Castanea partner Troy Stanfield will take a board seat, joining Uptain and former CFO Keith Huetson as board members. Castanea, which focuses largely on consumer ventures, was also an investor in Fuze before that company was bought out by Coke.
“We started networking about a year ago to narrow it down to the right fit,” Uptain said. “We liked the company, the culture, and Troy — they seemed to bring a lot of back-room expertise, and they’re encouraging us to think as big as we can, to be as aggressive as we can be.”
Uptain told BevNET that the combined expertise of Castanea and First Beverage should help the company as it continues its expansion. He cited First Beverage executives Tom First and Jason Camillos as adding operational experience in addition to financing due to their long history in the beverage business, including Nantucket Nectars, where First was co-founder.
Currently, the company is projected to reach approximately $20 million in sales across natural and conventional channels this year, according to a combination of SPINS and Nielsen retail sales data. Sales are up more than 60 percent for Essentia this year, according to the company. According to the company’s VP of Strategy, Neil Kimberley, the majority of the brand’s growth – 60 percent – is coming from same store sales, while 40 percent is coming from distribution growth.
The space the brand has to grow is what was particularly attractive to Castanea, Stanfield told BevNET.
“What they’ve accomplished with an organization of this size is compelling,” Stanfield said, and after that organization is fleshed out that growth should continue. “It’s literally about putting in place a national sales organization.”
The next step for Essentia is growing its mainstream retail footprint, according to Uptain. The company is currently in less than 20 percent of that channel, but is continuing to fill out a DSD footprint that will allow it support both grocery, and, eventually, convenience stores, according to Kimberley.
To bring the company closer to mainstream consumers, one slight pivot that has taken place is the brand proposition, which has gradually migrated from stressing the brand’s high alkalinity to its place as a hydration vehicle; this year, it has added the tagline “Hydration Perfected.”
“Consumers will find their way to the brand in multiple ways,” Stanfield said.
And that’s what Essentia plans to help them do with the investment.
“All funds will be used toward the growth of the brand,” Uptain said. “We’re actively out there signing up distribution to support the major chains we’re in.”
Mike Burgmaier, a managing director at Silverwood Partners, was the investment banker on the deal; the Giannuzzi Group LLP was Essentia’s legal counsel. A press release is below:
Essentia Water Secures Private Equity Investment to Accelerate Growth
Investment led by Castanea Partners with Participation from First Beverage Ventures Supports the No. 1 Alkaline Water Brand’s Rapid Market Expansion
(Bothell, Wash.) Sept. 4, 2014 – Essentia Water, the leading alkaline water brand in the United States, today announces that it has secured a private placement investment led by Castanea Partners with participation from First Beverage Ventures, which is the private equity arm of First Beverage Group, for an undisclosed amount. The investment will support the brand as it expands its distribution network, sales force, brand activation and supply capability to compete in the mainstream marketplace. Essentia Water is currently the top selling bottled water brand in the natural channel; the company is poised to gain ground in traditional grocery, convenience and other consumer retail outlets. In addition to funding, Troy Stanfield, a partner at Castanea Partners, joins Essentia’s newly formed board of directors.
In the $2.5 billion premium hydration category, Essentia Water is driving incremental growth. Thus far in 2014, the brand is checking in with a 66 percent sales increase across conventional grocery, specialty and natural channels. Essentia is the no. 1 selling brand in the fast growing alkaline water segment with roughly 40 percent market share. At the close of 2013, Essentia marked 10 consecutive years of growth with eight of those being in double digits, and is on track to add 2014 to the list.
“We were looking for more than just funding,” said Ken Uptain, Essentia’s founder and CEO. “We wanted a value-added partnership that would take us through an accelerated growth phase without losing the authenticity that our brand has created since its initial launch in 1998. With this deal, now that is exactly what we have.”
In mid-2013, Michael Burgmaier, managing director with Essentia’s exclusive financial advisor, Silverwood Partners, introduced Stanfield and Uptain. “This is an exciting opportunity for us to invest in the beverage space again,” said Troy Stanfield, partner at Castanea. “The team at Essentia has done an incredible job of positioning the company as a leading brand within the marketplace.” Castanea previously owned Fuze Beverage, prior to its sale to The Coca-Cola Company. “Essentia’s steady progression and consistent performance make it an exciting brand with a bright future.”
Los Angeles, Calif.-based private equity firm First Beverage Group partner and Nantucket Nectars founder Tom First agrees. “Essentia’s growth has been explosive and the brand is poised to become a powerful healthy lifestyle brand. We are excited to add our relationships and brand development expertise to an already talented team at Essentia.”
In the past 12 months, Essentia has rounded out its executive leadership team with the hiring of several key beverage industry veterans as well as added to its field sales and marketing teams. The company has addeddirect-store-delivery (DSD) distributors in New England and the Midwest to gain market penetration. Consumer marketing initiatives were also launched this summer in core markets, including event sponsorships and targeted sampling. Recently, Essentia kicked off its team of “Hydration Specialists” comprised of health and fitness experts in specialties like yoga, Pilates and nutrition. Since its inception, Essentia Water has employed grassroots tactics to educate retail and consumer customers about the benefits of its high-pH alkaline, electrolyte-infused functional water. Authentic word of mouth has played a key role in this endeavor. This new funding enables Essentia to build on proven strategies as it expands to new markets.
The Giannuzzi Group, LLP, based in New York City, acted as legal counsel to Essentia Water LLC.
Essentia Water, LLC launched its hydrating alkaline water in 1998. The first functional bottled water offered in the United States, Essentia is the no. 1 selling bottled water brand in the natural channel and the fastest growing top 10 premium bottled water brand in the grocery channel. Essentia is Hydration Perfected™, created using a proprietary process that results in an electrolyte-enhanced water with an alkaline 9.5 pH. Easily absorbed in the body, Essentia hydrates, restores and balances to promote optimal health. Headquartered in Bothell, Wash, Essentia is available at natural foods markets and grocers throughout the United States, and online at Amazon.com.