KonaRed rapidly expands distribution in wake of licensing pact with VDF Futureceuticals
In a letter to shareholders, CEO Shaun Roberts detailed the recent progress the company has made. The company has added 2,800 retail outlets in the past six months, and Roberts credits the deal with unlocking the floodgates.
KonaRed, based in Koloa, on Hawaii’s Big Island, had been locked in an IP fight with VDF Futureceuticals, based in Momence, IL. VDF FC makes a wide range of fruit-, vegetable-, bean- and grain-based nutraceuticals including its proprietary CoffeeBerry range of ingredients derived from the fruit of the coffee plant. VDF FC holds three patents on coffee berry ingredients, all granted in 2010. KonaRed had challenged these as invalid, and had some partial legal success along the way in defending its position that it was not infringing on the patents.
Eventually VDF FC decided to join forces with KonaRed, entering into a licensing agreement, rather than trying to prevail in a damaging court fight.
“Shaun and [his wife and KonaRed co-founder] Dana Roberts impressed us… it became immediately apparent that they are genuine people and terrific marketers,” FutureCeuticals executive vice president John Hunter said.
Building a brand
“Almost exactly conjunction with signing the license agreement was the signing of an agreement with Splash Beverages,” Roberts told FoodNavigator-USA. “They are the people that were behind the distribtuion of Red Bull and Bolthouse Farms. They are our master distributor in the United States.
“Over the last six months with Splash we have signed upwards of 18 distribution contracts with beverage distributors. We are well on our way with our national distribution plan,” he said.
A big part of building demand for the products has been an aggressive sampling campaign, Roberts said. One of the catchphrases the brand uses is “wellness you can feel” and customers need to have a personal experience with the products to make that slogan resonate.
“You have to the get the brand on the shelf and build a distribution network. But in addition to that, you have to get the product in people’s hands and let them experience it,” he said.
KonaRed original is shelf-stable and contains KonaRed coffee fruit liquid extract plus pineapple and apple juice from concentrate. It is sweetened with stevia leaf extract. (The ‘lite’ version has no pineapple juice and includes monk fruit.) KonaRed with coconut water and KonaRed with organic green tea and powdered on-the-go sachets are recent additions to the portfolio, and Roberts said additional line extensions are in the plans for 2015.
Help on the science side
Roberts said pairing with VDF FC has made a stronger team. VDF has done most of work on the science backing the benefits of coffee fruit, he said.
“We now have the backing of VDF Futureceuticals on the manufacturing and science side. They are overseeing all of our manufacturing,” he said. “VDF is a leading ingredient manufactuer both in farming and in technology. Partnering with them has been instrumental from everything from quality control to falling under their science umbrella."
KonaRed products are positioned as mostly caffeine free energy and general wellness beverages. The work VDF FC has done on the ingredient focuses on its neuroprotective qualities, especailly in its effects on brain derived neurotrophic factor. These are benefits that KonaRed will not highlight in the short term, Roberts said.
“We don’t want to overload the consumer with a full on science bombardment, but we will be coming out with a campaign about coffee fruit is and what it does. For consumers who are interested in that information, we will have it available. We do provide an efficacious dose of coffee fruit in every product we put out there,” he said.
