So what happens when two long-time beverage industry CEOs occupy the same 1,500-square-foot office space at a startup company fighting for shelf space among the corporate giants those driven CEOs once served?
At Hydrive Energy L.L.C. in Rye, one assumes the title of CEO. That would be Brian O”™Byrne. The other dubs himself “Energy Czar,” at least on his business cards. That would be Mike Weinstein.
They share an age ”“ both are 59 ”“ and a host of multitasking duties that were delegated to others during their previous corporate incarnations in an industry to which they”™ve devoted their entire careers. These days the professionally reborn chiefs work at standard-issue desks beside other office workers in their 14-employee company. Â Â Â Â Â Â Â Â Â Â Â Â
Since teaming up in 2005 to form their own business at 350 Theodore Fremd Ave., O”™Byrne and Weinstein have used their personal and professional connections in the industry to enter the revved-up energy drinks market this year with a splash of innovation ”“ and with healthy portions of caffeine in their newly branded product line. Boosted by a recent distribution and equity-stake deal with the Dr. Pepper Snapple Group, the partners project $5 million to $10 million in sales this year and are looking to grow at least 50 percent in 2009, O”™Byrne said.
Crossing paths
A native of Dublin, Ireland, O”™Byrne immigrated to the U.S. and settled in Westchester County in 1981, when he opened the first U.S. office for Irish Distillers. Five years later, he joined Pernod Ricard S.A. as head of its international alcoholic beverages division after the French company acquired Irish Distillers. In 1996, O”™Byrne moved to the soft-drinks side when he became CEO of Pernod Ricard”™s Yoo-Hoo/Orangina company. Cadbury Schweppes plc in 2001 purchased those brands from Pernod Ricard.
A Larchmont resident and Westchester native, Mike Weinstein started in the beverage business in 1972 with the Pepsi-Cola Bottling Group. In the ”˜80s he rose through the executive ranks of A&W Root Beer Co. and, after the company went public, was named president and chief operating officer of A&W Brands Inc. in 1991. He later served as CEO of Triarc Cos.”™ Mistic Beverages and Royal Crown Co. In 1997, his CEO duties expanded when Triarc acquired the floundering Snapple brand from Quaker Oats. His role in Snapple”™s rapid turnaround earned him the Beverage Industry Executive of the Year award in 1999.
O”™Byrne”™s and Weinstein”™s career paths converged after the millennium, when Cadbury Schweppes acquired first the Snapple Beverage Group for $1.4 billion and in 2001 the Yoo-Hoo/ Orangina Beverage Co., which became a unit of Snapple. Weinstein moved from his CEO post to serve as president of global innovation for the parent confectionery company, while O”™Byrne exchanged his CEO duties for those of an executive vice president in global innovation. Weinstein retired at the start of 2004 and O”™Byrne left Cadbury Schweppes soon after. In January 2005, they started Inov8 Beverage Co. in Rye, not far from their former offices at the Cadbury Schweppes Americas Beverages Division in Rye Brook.Â
“It was like an idea house,” O”™Byrne said. “The whole idea was that we would create concepts, trademarks, packaging formulations” either to sell to larger beverage companies or develop commercially on their own. “We actually did both,” he said.
Energy demand
Inov8 in its first year introduced No-Cal Soda-Pop, resurrecting America”™s first diet soda that hit the metropolitan New York market in 1952 and disappeared from store shelves in the ”˜60s. The bottled No-Cal brand has been retired to the office refrigerator since O”™Byrne and Weinstein turned their focus to their spinoff Hydrive Energy company and its line of nutritionally enhanced energy drinks.
“Everything we do is fact-based and research-based,” O”™Byrne said. “When you look at the beverage industry, enhanced water is growing and energy is growing. What we developed was a nutritionally enhanced energy drink. Everything we do is based all around energy. We found that people are not so much looking for water but enhanced water with stuff in it.”
Demand for liquid pep is growing most energetically. The U.S. market for energy-boosting beverages has increased more than fourfold over the past five years, according to the market-research firm Packaged Facts. Sales grew from $1.2 billion in 2002 to an estimated $6.6 billion in 2007 and are projected to reach $9.3 billion by 2011.
Breaking from the pack, the partners at Hydrive have taken aim at a more mainstream and perhaps older consumer with their product line.
The usual energy-drink user today is young, male and “health-unconscious,” O”™Byrne said. Beverages such as market-leading Red Bull come with a “hard-core image” and strong taste that some would-be consumers shun ”“ “and they all come in cans.” That morning can of Red Bull on one”™s office desk might suggest to the boss that one”™s had a hard night on the town, O”™Byrne noted.
“We really wanted to give people a refreshing energy drink that was low in sugar, low in calories” ”“ 30 calories in each 15.5-ounce bottle of Hydrive. “From the consumer perspective, a large number of people want to drink energy drinks and are coming into the category, but they want to drink healthier energy drinks. That”™s really what we”™re doing,” O”™Byrne said. “Hydrive is for people who want energy but don”™t like the energy drinks out there.”
The partners are pushing four enhanced flavors of their Hydrive brand: V, a vitamin-enhanced citrus drink; X, an antioxidant-loaded berry drink; E, a lemon-lime drink with six electrolytes, and S, a blue raspberry-flavored drink with herbal, vitamin and other natural “performance enhancers.” All contain caffeine and taurine, basic ingredients in most energy drinks.
Making their mark
The company has partnered with Polar Beverages Inc., the country”™s largest independent soft-drink bottler, to produce Hydrive drinks. In July, Hydrive took a big stride in penetrating the market domination of the “Big Three” ”“ Coca-Cola, Pepsi and Dr. Pepper ”“ when it reached a distribution agreement with the Dr. Pepper Snapple Group Inc. (DPS), the Texas-based company spun off in the last year from Cadbury Schweppes. The deal gives DPS a minority stake in the company of less than 25 percent, O”™Byrne said.
“This is the first time they”™ve actually taken ownership in the company” whose products it distributes, O”™Byrne said of DPS. “I think it”™s Mike”™s and my relationship with the players in DPS” that attracted the Big Third to an equity stake. “They think what we”™ve created is a gap in their portfolio” and want to grow and profit in that market with Hydrive.
“If you have the best idea in the world or the best beverage, if you don”™t have a way to get it into the stores, you”™ve actually got nothing,” O”™Byrne said. “So this alignment our company has with Dr. Pepper is a real big deal.”
Hydrive drinks currently are sold in 12 or 13 states in New England, the Middle Atlantic region and Midwest. DPS serves 70 percent to 75 percent of the U.S., “so that”™s a large opportunity for people like us,” O”™Byrne said. And Hydrive still has not tapped potentially hot markets in warm-weather states such as Florida and Arizona.
“That”™s a question we”™re really contemplating at the moment, how much to broaden our distribution,” the CEO said. The company could take the “big-bang” approach or expand gradually, perhaps reaching next into 20 or 25 states.
“We try to focus and make things simpler,” O”™Byrne said. “That”™s kind of the mantra ”“ focus and simplify.”
Competition in that market niche they”™ve claimed? “We haven”™t seen that yet, so that”™s good. The longer that goes, the better, because it gives us a stronger foothold,” he said.
That market foothold is measured not by stacks of four-packs in large grocery stores but one bottle at a time in places like Jerry”™s Post Road Market in Rye.
“When you want to create a demand, you want to do it on a bottle by bottle basis, on a consumer by consumer basis,” said O”™Byrne. “Demand for a product like this is created in a deli or convenience store.”
