“Everyone from retailer to distributor to manufacturer to marketing agency ... [is] trying to make up for lost revenue from a few years ago, and the watermark is in a new place. We [are] trying to figure out where it sits, and for me, what that means is we have to be ultra-strategic, selective, and smart, and we have to learn how to say no. There will be some noes. We will have to tell some folks, 'No thank you this year; you're part of our ‘25 objective.' We just have to do the right thing and be smart,” Herndon shared with FoodNavigator-USA in a Startup Spotlight video.
United Sodas goes 'full throttle' in retail expansion in 2024
Founded in 2020, United Sodas of America provides a range of premium sodas sweetened with a blend of organic cane sugar, erythritol, and stevia for 6g of added sugar. Initially, the brand started as a direct-to-consumer (DTC) brand and expanded into retail locations in 2023, Herndon said.
Last fall, United Sodas raised $4.5 million in a seed round, which was partially used to hire Herndon, who previously worked as the VP of sales for Peeled Snacks and VP of sales and marketing for Hazelnut Growers of Oregon, and Carly Nicholas, former director of marketing for energy drink brand Juvee and Red Bull brand marketer, as head of marketing.
With the executive team fleshed out, United Sodas is expanding its retail footprint in channels where a premium soda offering will do well, he said.
“For 2024, our intentions are to take that branding and that leverage that we had from DTC and B2B over the years, and e-comm last couple of years, and that little bit of toe in the water that we have in ‘23 and start to move ‘24 full throttle into retail. We're chasing the natural channel, the specialty channel, and select supermarkets.”
Consumers return to soda seeking better-for-you options
The company plans to capitalize on consumers returning to the soda category through better-for-you options, including low- and no-sugar options and gut-friendly beverages, Herndon explained.
Sodas with better-for-you claims are growing. Diet sodas and those formulated with alternative sweeteners and digestive health claims achieved $332m in sales, growing 197.9%, according to previously shared SPINS MULO data for the 52 weeks, ending Dec. 31, 2023.
“Poppi and Olipop, and some of the gut functional beverages, have done a great job of helping bring people back to soda that have left the category due to sugar, migrated either to just water or to flavored waters or lightly sparkling waters. ... I don't believe it's replaced with a desire for that consumer to want a full flavor yet naturally sweetened [soda].”
Herndon added that United Sodas is able to tap into that demand for lower sugar, saying, “We've been able to have that little blend of organic cane [sugar] and stevia, just enough of a blend, that our flavors are right on target — our flavors are right on mark.”
'We have a sound grasp on the fundamentals'
In growing United Sodas, Herndon will be hands-on running the business, managing national accounts, and ensuring that the brand achieves velocity metrics – how quickly a consumer purchases a product — and margins. Velocity is important not only because it shows how in demand a product is, but it also maintains positive relationships across a brand's supply chain, he noted.
"You [need] to have the right velocity," Herndon said. "Everybody wants to keep inventory fresh. We all want to have excellent relationships with our co-packers, and we're in the process of doing that right now. ... But all of that is wrapped up in velocity. If you're not turning and your warehouse is just sitting there, nobody's happy."
In addition to strong velocities, startups need to have a "sound grasp" on their product costs and margins, an increasingly important metric to attract investors, he shared.
While many startups have struggled to raise capital — either through private-equity funding or debt financing — "there has been a couple of beverage companies in the last month that have received some pretty good investments," Herndon pointed out. Recently, functional mushroom beverage brand Odyssey raised $6m through family offices and individual investors.
"It doesn't take long for investors to chat with us to understand that we have a sound grasp on the fundamentals, and we know where we're going and what we need to do, and we know how to say no when it's not right. I don't want to be one of those Expo [West] companies that ... don't see the show next year or don’t see in the show the year after that. We need to do what is right to build our business. We have a sound grasp on our product costs and our margins and what it takes for us to do business and what it takes to make our product move.”
