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The Original Long Island Iced Tea, which dipped toe into tough NY market in 2011, is ready to step up effort in 2016 after merging into publicly traded shell last year and recruiting advisory board of familiar beer and bev names: John Carson, Dan Holland, Tom Cardella and Bump Williams. It's well along in private placement, enlisting DSD distributors for RTD iced tea line, on the lookout for modest acquisitions on NA side and planning portfolio of alc bevs ranging from RTD cocktails to ciders and beer. By 2d half of year, co hopes to have launched its first alc brands and be well along in national push behind NA tea.
Brand was created in 2011 by Phil Thomas, who brought street-level intimacy with bev biz by dint of having worked Tropicana and vending routes. After testing brand proposition a coupla years, he revamped branding in 2014 and began process of merging into publicly traded shell co. That deal concluded last May so that co now trades under LTEA moniker on OTC bulletin boards. Deal brought into mix small tranche of capital, potential for acquisitions via currency of LTEA shares and key members of brain trust. One is Paul Vassilakos, whose Petrina Advisors helps manage family office of Australian fashion magnate Eric Watson, whose Bendon Lingerie has been allied with Elle Macpherson, Stella McCartney and Heidi Klum. (Watson has diverse range of other interests, from ownership of New Zealand Warriors rugby team to grass-fed beef venture in Georgia.) Also aboard is former Lion Nathan exec Julian Davidson, who's helping plan alc-side portfolio with view to replicating success he enjoyed building Independent Liquor New Zealand and selling it to Asahi. Co's advisory board will be familiar to those in bevs or beer in US: Dan Holland, former Haralambos Bev distribution vet who segued over to supplier side at Activate, Nawgan and XXIV Karat wines; former Royal Crown chief John Carson, now on banking/consulting side at Intercontinental Beverage Capital; recently retired beer exec Tom Cardella, who most recently managed MillerCoors' craft/import unit, Tenth & Blake, and former IRI and Nielsen exec Bump Williams, now a consultant.
Thomas started with simple vision: find a way to monetize global recognition of "Long Island iced tea" as cocktail recipe. In process he figured he'd tap into younger consumers migrating away from CSDs, and from beer to premixed cocktails, while also appealing to retailers seeking more local, craft offerings at affordable prices. He'd also have a vehicle with which to make targeted acquisitions that might yield some synergies, using publicly traded co's shares as currency.
He started on non-alc side, with iced tea that's out in range of 13 flavors in 3 sizes, priced between AriZona and Snapple and carrying vaguely nautical feel on label. Thanks to use of real-brewed, hotfill tea, non-GMO certification and cane sugar as sweetener, it's "premium product at an affordable price," says Thomas. Diet entries use sucralose to sweeten. Core entry is 20-oz PET bottle that moves via DSD distributors, goes out at 4 for $5 in grocers, promoted at 10 for $10, and at $1.49-2.49 up and down the street. That's buttressed by 1 gal jugs for groceries and 12-oz USDA-approved "minis" targeting schools via lower-calorie formulation that uses monk fruit to get in at 60 calories. While past efforts by marketers to employ brand name with alcoholic connotations have drawn controversy as way of acculturating kids to alc brands, Thomas said issue hasn't surfaced at all. To be careful, he named school-targeted mini "Long Beach Iced Tea," conjuring up town on Atlantic Coast near NYC.
So far tea is available mainly on eastern seaboard from Delaware north to New England, having landed such chain accounts as Big Y, Stop & Shop, ShopRite, Duane Reade, Fairway and Best Market. DSD roster so far includes likes of New England/Good-O in NY, buttressed by Elmhurst Dairy to service Rite Aid chain, as well as Metro in Philadelphia, High Grade, Nash and Canada Dry Asbury Park in NJ, along with lotsa dairy operators. Brand entered Fla about 6 months ago, via trio of small distributors, and is dipping toe in Midwest.
Gearing up for coming spring/summer, it recently brought aboard AriZona Iced Tea vet Joe Caramele as vp natl sales & marketing for NA div, and is in process of private placement that would raise $4 per share, or $3 mil, to support broadening of distribution and marketing and move into alc space. Co hasn't been shy about undertaking marketing efforts in past, announcing its presence in 2014 via billboard campaign in NY and last year running promo with ESPN offering trip to Hawaii Bowl. It estimates that sales closed 2015 at $1.8 mil, up 50% from 2014.
Co's public status originated with so-called special-purpose acquisition corp, or SPAC, with $552 mil in cash that needed to be deployed within 2 years. After kicking lotsa tires, co eventually backed Long Island Iced Tea to tune of $5 mil (with co netting $3 mil after expenses), returned the remaining $547 mil to investors. (With additional money from outside investors, co has brought in $6.5 mil so far.) Merger into SPAC got brand its public listing, tho Vassilakos said a key priority is to migrate to a national exchange so that institutional investors are able to invest.
Beverage Business Insights
Vol 13, No 21 February 17, 2016
Mr. Caramele will be responsible for developing and overseeing the Company’s strategic growth into national retail accounts. Mr. Caramele has substantial experience in the beverage industry, having spent the past nine years at Arizona Beverages USA, most recently as Executive National Sales Director for the past five years. As Executive National Sales Director, he managed a team of 85 individuals and portfolio of over 100 accounts with annual retail sales estimated to be over $850 million.