'Exciting growth' for drinks company

LAURA WALTERS
Last updated 05:00 02/02/2014
Better Drinks CEO Craig Cotton
PETER MEECHAM/Fairfax NZ

GROWING PAINS: Better Drinks CEO Craig Cotton is turning the teenage company into an adult.

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In just three years The Better Drinks Co (formerly Charlie's) has gone from one brand to five.

The latest addition to the family was announced last week - an exclusive distribution deal with iced tea brand Ti Tonics. Its portfolio already included Charlie's, Phoenix Organics, Real Iced Tea Co and Sunkist.

Under the latest deal Ti Tonics co-founder Dr Tracey King will continue to co-manage the 4-year-old brand with The Better Drinks Co team.

Better Drinks chief executive Craig Cotton said the iced tea market was currently small in New Zealand but globally was in the top two or three beverage categories.

According to market research firm AC Nielsen, the Kiwi iced tea market grew by 20.3 per cent last year to be worth $7.3 million annually. Cotton expects Ti Tonics sales to increase by 400 per cent under a new distribution model.

Ti Tonic would be exclusively distributed through Better Drinks' cafe network in Australia and New Zealand and in the United States from next month.

Cotton said while there were a lot of brands popping up in the Kiwi iced tea market, it was not difficult to secure market share.

"Because it's growing at the rate it is there's a lot of excitement out there in the category."

It helped that Ti Tonic's antioxidant-rich beverages were unique, Cotton said.

He described Ti Tonics as the preschooler of the Better Drinks "family".

"Now we have a preschooler, and we have to decide what school we want the preschooler to go to, will it wear a uniform or won't it, what will be its afterschool activities, who will be its network of friends, and, more importantly, will it have a brother or sister?"

The Ti Tonic distribution deal was the latest in a series of changes for the Kiwi drinks company over the past three years.

The company was started as Charlie's Trading Co 15 years ago and listed on the NZX in 2005. It then bought home-grown Phoenix Organics for $10m.

In 2011 Japanese beverage giant Asahi bought Charlie's for $129.3m and delisted it. The following year Cotton stepped up to lead Charlie's as co-founder Stefan Lepionka departed after bedding in the company's transition to the new ownership. He continued the brand extension by creating Real Iced Tea Co in collaboration with Schweppes Australia (another Asahi company), with products going to market in October last year.

And then last November Better Drinks started selling Sunkist soft drinks as part of a long-term royalty deal with Sunkist Growers Inc. The deal gave Better Drinks the distribution rights for Sunkist products in New Zealand and the Pacific Islands.

Last year's name change from Charlie's to The Better Drinks Co was to reflect that wider portfolio rather than one brand, Cotton said.

"The last 12 months can be summed up as a significant change for our family," Cotton said.

He was coy about imminent changes for the Charlie's brand, saying he couldn't spill the beans at this stage.

After cementing in the new company structure, this year will be about growth, he said.

The plan was to "to take our promising teenager into obviously a successful adulthood", Cotton said.

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The company's three areas of focus for the year would be building a solid home base in New Zealand, expanding distribution in Australia and focusing on growing key markets overseas (its brands are already sold in 15 countries).

Better Drinks had been working with New Zealand Trade and Enterprise in its Focus 500 group to expand its beverage distribution in South East Asia and the Middle East, Cotton said.

There was a strong demand for natural beverages and iced tea in the Middle East and South East Asia.

Staff numbers have grown by around 10 per cent in the past nine months to more than 100 and Cotton said the investment in people was part of providing better engagement, customer and shopper execution and expanding the brand portfolio.

No other acquisitions are immediately on the horizon, Cotton said, but the company was always on the lookout for a deal that was the right fit.

Cotton wouldn't reveal any financial figures or what the company hoped to achieve in terms of sales or growth this year, but said Better Drinks was on an "upward trajectory".

Company Office records show the company filed in December its accounts for the year ending December 31, 2012, when the group made a net loss after tax of $14m following the sale of a subsidiary in Australia. Its operating profit was $2.6m off revenue of $43.1m.

THE OWNER

Japanese beverage giant Asahi owns 34 food, beverage and brewery companies in Asia and Oceania, North America and Europe, including Schweppes Australia and Better Drinks Co in New Zealand. In 2011 Asahi also acquired New Zealand's Independent Liquor, known for its alco-pop brands such as Woodstock and Vodka Cruiser for $1.5b. Asahi Breweries sales for the 2012 financial year was US$18.2 billion ($22b).

- Sunday Star Times

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