Relatively new company on beverage landscape, Fuze, is growing quickly and has built volume to about 5.5 mil 192-oz cases, according to CEO Lance Collins. That volume is up from about 3 mil cases in 2003. Company produces/markets/sells fruit-flavored non-carbs, RTD teas and energy drinks. Fuze is about to launch new energy drink called, "NOS" (photo) to supplement its existing Fuze Mega energy drink line; also new flavored teas "with anti-oxidants."
History and ownership. Company founded in 2001 by Collins who had background in liquor/wine/beer business. Before Fuze, he started "Crystal Ice" spring water line. Fuze is owned by Collins and other investors, including: 1) Boston-based Castanea Partners private equity firm. Castanea also owns Decision Resources publishing company and Lee Munder Capital Group. 2) U.K.-based Pentland which, according to its web site, lists among its brands Speedo, LaCoste and Ellesse.
Distribution; Coke and independent bottlers. Fuze distributes exclusively via DSD, says Collins. Distribution system made up of independent and Coke bottlers plus distributors. Collins says Coke bottlers include: Coke United, Coke Philadelphia, Coke Great Plains, Coke Viking and Coke Ozarks. Collins estimates about 13% of Fuze volume handled by Coke system. Independents include: Dr Pepper/Seven Up Bottling Group (not system-wide), Kalil Bottling and 7UP San Francisco Easley. Plus. Collins says Fuze also handled by several large Red Bull distributors and by Big Geyser in New York City. 'Upgrade.' Fuze is "looking to upgrade in some areas where our distributors aren't showing the increases that other distributors are," says Collins. Retailers. Collins says Fuze handled by major retailers, including Wal-Mart, Costco and Kroger.
Products. Fuze essentially has three beverage lines. Tea and fruit-flavored non-carbs which it calls "infuzions." And energy drinks. Infuzions produced in both regular and low-cal versions, both of which use sucralose. Low-cal line is called "slenderize." Company also sells "Mega" energy drinks in 16-oz cans and is about to introduce new energy drink called, "NOS." Name is used under license from Holley Performance products which makes nitrous oxide "Nos" products to boost performance of racing cars. Packaging. Infuzion products are in 18-oz glass. But Collins predicts gradual movement for Fuze and other non-carbs to hot-fill PET, "due to (product usage) in schools, at beaches, etc."
Volume and price. Collins says company's 5.5 mil case volume breaks down as follows: 70% juice drinks; 20% teas, 10% energy drinks. Says average price of company's 18-oz bottles is $1.39/bottle; $1.59 in C-stores. Consumer. Target consumer demographic is 18-to-34 year-old "active men and women."
Ahead; exit strategy. Asked whether he plans to sell company, Collins says, "we have no exit strategy." Adds: "We're running cash flow positive. We could stay in the business or sell if someone came along with the right price." Continues: "I love what I do ... If I could do that long-term there's no reason to sell." And also notes: "It's not out of the question that we'll do an IPO."
Future for small companies. Asked about future for other small companies in beverage business, Collins declares: "It will be harder and harder for them to break into the beverage business. The door is closing, because even if you have a good idea, you have to get the product on the shelves, and the big distributors and bottlers are less open to non-corporate-owned brands."
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