Sydney Morning Herald/ The Age Newspaper
17 November 2014
Not everything's fast and loose south of the border, as two tea tycoons can attest.
What enters your head when you put "drink" and "Mexico" together? I'd bet a bar-top of tequila shots you didn't think iced tea.
But Drew Bilbe did and four years later he and business partner Troy Douglas are rolling out their Nexba low-joule drink range in Coles supermarkets across Australia.
Yes, the 20-something high school friends are on a sugarless high.
So what's the Mexico connection?
"I was walking on the beach at Rio Nexba in the summer of 2010 enjoying a cold glass of ice tea and got inspired to create a natural, low-calorie version," Bilbe says, agreeing it was pretty random given that he was 23 and on exchange as part of his engineering degree at the time.
Returning to Sydney he immediately contacted his "like-minded" mate Douglas, who was studying communications/law.
"He (Drew) approached me and basically said 'hey, let's start an iced tea company'," Douglas recounts.
"I saw it as such a big opportunity because overseas ice tea is about 12 to 14 per cent of the total market of ready-to-drink beverages but in Australia it was only 1 or 2 per cent and there were only two options – Lipton and Nestea – and both offered high sugar content so we could see this market gap," Bilbe says.
"I could see it too," Douglas says, "and decided to defer and focus on Nexba's development. We didn't want a me-too product. We wanted to develop a true nutrition innovation."
Their timing was impeccable.
There is evidence that Australians' thirst for low or no-sugar drinks is far from quenched.
According to the Australian Beverages Council, the local non-alcoholic drinks market is valued at about $8 billion, in which small businesses targeting niche markets, including energy drinks, natural/organic products and iced teas, are making gains against Pepsi, Schweppes and Coca-Cola.
Most of the growth since 1999 has occurred in low- and no-kilojoule products, ABC spokesman Geoff Parker says.
"Energy drinks and iced teas have experienced the best growth over the last few years and although coming off a low base, both categories have experienced strong single-digit growth over that time," he says.
"Juice, and in particular ambient juice, found in the supermarket aisle, has been hit hardest by the growth in competing 'better for you' products like iced teas."
ABC research shows consumers are looking for sugar-free options and the adoption of stevia as a sugar alternative, and a number of already commonly used non-nutritive sweeteners, are fuelling this demand, Parker says.
Douglas and Bilbe are stoking this fire.
The duo worked with mentors Peter Baron, creator of Sippah Straws, Phil Baldock, former president of Beam Global, and the mysterious "Mr Smith", who developed the formula for their product line.
Eight months later they had their first drink, Nexba Wild Watermelon ice tea.
According to Bilbe, "Mr Smith" is a sweeteners/natural flavours guru and the reason Nexba is "one of the first (in Australia) to use stevia ... a plant root and part of the leaves about 300 times sweeter than sugar".
Then, with a mix of personal loans and investment funds from Baron, the partners imported a canning line that canned about 2000 cans an hour. They leased factory space in the Sydney suburb of Hornsby.
"Everyone pitched in on our first 100,000 cans, a real family affair. Drew's 80-year-old grandfather proved the best worker of all."
By early 2012 it was time to find some drinkers. They distributed to select cafes while working on the "often neglected" school canteen market, Bilbe says.
Each can contained only 305 kilojoules and up to 50 per cent less sugar per serve than rival products, so they met stringent school canteen nutrition standards. "One of the most exciting moments was selling that first pallet" to Quality Food Services in Queensland, which distributes to about 90 per cent of schools in the Sunshine State.
By April 2012 they were ready for their first major commercial client. It was petrol and convenience chain 7-Eleven.
"We got to the stage where our little canning line couldn't keep up but found a contract packager in Victoria who can produce 375ml non-carbonated recyclable aluminium cans which, we learnt, not many people do," Douglas says.
In the past 30 months deals with IGA Supermarkets, Caltex and Virgin Australia have been brokered.
From next month the hallowed ground of shelf space – Coles – will sell a multi-pack of four cans in its supermarkets and single cans in its Coles Express outlets.
The four-packs will include Nexba's Watermelon, Sparkling Cherry Lime and Life's A Peach ice teas plus the brand's debut cola drink, Brewnette, which is infused with green coffee extract.
"Coles realised that demand for lifestyle drinks has grown exponentially ... and this (Brewnette) is a real innovation piece."
The pair's original fiscal goal was turnover of $500,000. In 2013-14 they reached $1 million, broke even and have sold about 2 million cans to date.
Today Nexba is sold in more than 3000 outlets nationally and is the fastest growing brand in the P&C sector, according to market research by Aztec MAT.
Optimistic about the multinationals in their ice bucket, Bilbe says the brand's goal is to double every year via organic growth.
"Already Australia's ice tea market has grown to 2.5 to 2.6 per cent since we launched so we really don't want a percentage of the existing pie but want to grow the market.
"There are big players in canned drinks, but I mean is someone like Schweppes really a rival to us?"