7 October 2014
Words: Michael Bailey, Editor of BRW
The “Aussie boys” behind Nexba iced tea will play with the big boys, inking a distribution deal with Coles that will see production rise from 1 million cans in 2013/14 to 3 million this year.
Nexba’s generation Y founders, Drew Bilbe and Troy Douglas, have spent four years building a 4.8 per cent market share in the beverage section of Australia’s petrol and convenience stores.
They have enlisted help for the big step up into grocery, hiring CTD as marketing and third-party logistics partners.
“CTD has Coles and Woolies experts who’ve got 30-year relationships in there, so they’ve been great mentors in terms of what Coles was looking for,” Douglas says. CTD also partners with Sipahh, the milk drink straws invented by Nexba’s sole external shareholder, Peter Baron.
Having already switched to contract manufacturing early on, Bilbe says Nexba will continue to subcontract many aspects of the business as it grows.
“We want to focus on the fun stuff – selling the brand and our passion – driving new product development,” he says. (This is in keeping with a trend among other young F&B entrepreneurs – Mia McCarthy of Woolworths-distributed Yummia has subcontracted to the extent she doesn’t directly employ anybody.)
The start-up has added to Peter Baron in its mentorship ranks, enlisting the support of Phil Baldock – a former regional president for Jim Beam – in an advisory capacity.
“He’ll make sure Drew and I just focus on the important stuff,” Douglas says.
Nexba has also recently added an organic cola with green coffee extract (known as Brewnette) to its three iced tea variants, and Bilbe promises a “whole new range” is on its way.
“Iced tea is traditionally seen as a summer drink, so a good way to smooth out the peaks and troughs around that is to diversify. We want to be known as beverage innovators, and cement our position as Australia’s fastest-growing beverage company,” he says.
Distribution with Coles and Coles Express will open 1400 new shopfronts for Nexba, and Bilbe hopes the increased brand visibility will drive growth in Nexba’s foundation petrol and convenience stores and school canteen accounts.
The move has not been without its logistical challenges. For instance, Coles supermarkets will only sell four-packs of Nexba product, so those cans cannot have individual barcodes.
“We’ve had to change the production process to allow for that, but it’s actually been a good education exercise,” Bilbe says. “Energy drinks are the only other thing sold in that four-pack, 355 millilitre-can format and we’re a much healthier alternative to those.”
Available in Coles from October 27, Nexba has invested in sampling promotions that will see the four-pack sell for half its regular $8.99 price from November 14 – and gain “valuable real estate” at the end of the aisle into the bargain. Nexba will also pay for what are endearingly known as ‘shelf beanies’, a round wobbler-type note that sticks out from the shelf saying ‘NEW’ and providing more information about the company and its range.
Bilbe claims that Coles, in granting Nexba the shelf space to range all three of its iced tea flavours, has provided an amount of support that’s “unusual” for a new product.
“We’re beyond just another ready-to-drink offering for them. They see us as a lifestyle beverage, a natural product with low calories and low sugar. They’re behind the ‘two young Aussie guys’, Australian-made and owned story as well.”
After just missing profitability in 2013/14, Douglas says Nexba is “definitely entering profitability now” and is targeting $4 million to $5 million revenue for 2014/15.
“If we end up going into Woolworths it could be more than that, but we want to prove our success in Coles first,” he says.