Coco Fuzion 100: CEO believes stars such as Jamie Heaslip have helped drive the brand
Steve Barton believes sports stars such as Jamie Heaslip have helped drive the new Coco Fuzion brand, writes Fearghal O'Connor
Coco Fuzion 100 may for now have the status of 'plucky contender' in the highly-competitive world of beverage sales but the coconut water brand's sporting links are definitely of the high performance variety. Steve Barton - the chief executive of C7 Brands, which developed and distributes Coco Fuzion - is standing in the lobby of Dublin's Alexandra Hotel with Bernard Brogan. The Dublin football star's Legacy Consultants has just struck a deal to become global marketing partner for the drink.
But Brogan is far from the only sports star in the Coco Fuzion mix. As we sit down Barton pulls out his phone and makes a call.
"Are you close by Jamie, can you sit in on this?" he asks.
A few minutes later former Irish rugby captain Jamie Heaslip walks in, straight off a flight, dressed like he has come from the airport via a gym. Heaslip is one of the original shareholders in C7 Brands. Other shareholders include former Manchester City and England player Shaun Wright-Phillips and Scottish rugby legend Ian McGeechan.
C7 began life in England in 2013 but carried out an innovative reverse takeover of the previously ESM and AIM-listed Irish investment company Prime Active Captive (PAC) in 2016 as a means of securing further funding.
In recent weeks the company has secured a €2m investment from Dublin investment firm Abbey International Finance, in exchange for 60pc of the company. Barton is not short of confidence and is targetting extremely ambitious investor returns.
"If you take a five-year view on revenue we are looking at a £65m (€72.7m) business. The opportunity is that big because people are coming out of sugar-based beverages and looking for an entity to buy into. There are additional opportunities with health beverage bolt-ons."
The drinks market is very acquisitive right now, says Barton. "A lot of the big boys are on the acquisition trail, especially in the health market."
He has been in the drinks trade for 28 years. He originally started out on the alcohol side of the industry and worked with a number of major wine companies including Ernest & Julio Gallo. In 2001 he set up Brand Phoenix and launched the South African blockbuster wine brand First Cape, which became the third-biggest-selling wine brand in the UK. He later sold much of his shareholding, but still owns 14pc.
First Cape had, prior to that, become the first ever official wine sponsor for the British and Irish Lions rugby tour to South Africa in 2009 - of which McGeechan was coach. Heaslip, a player on the tour, became an ambassador for the wine brand. First Cape went from selling 750,000 cases a year prior to the rugby tour to 3.2 million cases in 2010.
"It was an extreme success," says Barton.
But Barton had noticed that change was afoot. Ever-increasing taxation was eating into margins and alcohol consumption in general was falling.
"We wanted to evolve into a health beverage business. We sponsored the Lions again in 2013, but the conversation had changed. For example, we couldn't have anyone in a photo with Jamie that looked under the age of 25."
Health drinks were already big at the elite level of sport but were starting to be taken up by consumers and Barton saw an opportunity in creating an affordable, tasty but healthy drink from Vietnamese-grown organic coconuts. Heaslip and McGeechan liked what they were hearing.
Five years on, the brand has been on sale for over a year through a number of major retailers in nine markets around the world, including Australia, the UK and Ireland.
"We will sell 1.2 million cases of Coco Fuzion this year. There's very few things growing as fast as that and on the distribution deals we currently have alone, without any new markets, you will see a doubling of the business during 2019, comfortably." That growth rate, he says, is based on what he believes is an excellent product but also on timing: "The timing is everything. The consumer demand for healthy beverage is now."
The timing proved good for Heaslip too. He liked the idea of developing a new healthy drink from the start. "I have a big personal interest in the health space, probably off the back of doing what I did for as long as I did," says the former Irish international. "The impact of sugar is huge and that is why you are seeing sugar taxes come in. I go around to a lot of rugby mini-camps and I have seen over the years an increase in childhood obesity. But the timing of this could not be better because the general public have caught up and people are more into their health and wellness."
His involvement with Barton and Coco Fuzion was invigorating and gave him a welcome off-field focus away from the endless match and training videos that he needed to watch as part of his homework as an elite international player. But he quickly also learned the enormity of the task of challenging long-established brands.
"I remember the first time seeing the Coco Fuzion can and the first tastings we did and you are thinking 'We are going to hit the market running'," says Heaslip. "But I learned a lot about the FMCG [fast moving consumer goods] world - about distribution and how your supply chain is massive, especially if you want to play with the big boys. That's why we slowed down, took our time and partnered with the right people."
In February Heaslip announced his retirement from rugby on medical advice. He had long realised that, while the money at the top level of rugby is good, "it's not soccer-player money, so you are going to have to go working again".
The business world, he says, was always going to be more appealing than the coaching route and he had invested in various companies long before he stepped away from the game - he just did not expect it to become his main focus so soon.
"I wasn't planning on being finished right now but that is where the cards have fallen. Having an opportunity to get involved on a more strategic level in this really interested me because I have seen what can happen when you follow a passion and that's why I'm going to get a little more involved as time goes on."
For Barton, such hands-on involvement from elite sporting personalities - as more than just paid ambassadors - has been key to the initial success of the brand because it brought "immediate authenticity".
But, he says, funding was the other piece of the jigsaw that needed an innovative approach.
"The greatest threat to any business is cash and cash flow," he says. "When you are launching absolutely vertically you've got to have cash. The early stage is hard, but you have to keep funding it and you have to deliver. But when the brand starts to come alive you have to bring in external cash because you can't keep privately funding it."
The investors had spent £2.2m on the brand, but the reverse takeover by C7 of PAC brought in more capital. The previously stock market-listed Irish investment firm had offloaded its investments but had 1,500 remaining shareholders and just under €1m of cash on its books.
"It gave us a short window whereby we had funds to inject into the brand to get it ready for market. Because of PAC's PLC status it also opened up other funding sources which is how the Abbey investment came about."
That infusion of further cash - as well as further debt financing - has allowed the company to push out the brand quickly and it now has more than 16,500 selling points in nine core countries.
"We are in an extreme growth phase so we need capital to buy stock and have it ready for retail. Once you engage the major retailers around the world you have to service that demand and that demand is huge. So you now have two Irish institutions - PAC and Abbey - that have financed and are 100pc shareholders of an international business and there are opportunities to raise further capital through both."
That continued access to funding is crucial, he says. "You have to be capitalised to do this because, if you are not, as soon as you go in you will be struggling.
"Your funding partners have got to give you enough leverage to enable you to not only drive the business into retail but you have got to then market the brand to give it an identity very, very early in the cycle. The graveyard of many good ideas has been a lack of proper marketing."
As part of its deal with Legacy Consultants, C7 will spend £1.2m over 12 months on "activation of the brand".
The structure of the newly-reinvented PAC business is such that it can be used to expand into other areas. Barton says that both Abbey and PAC have "a huge appetite for acquisition".
"The distribution network we have built is very valuable to ourselves but also very attractive to other ambitious brands. There is an appetite from all the shareholders to look to acquire health brands that have their own distribution. There are one or two brands in the functional water space that we are looking at although we will likely not do anything before 2019 because our sole focus right now is Coco Fuzion."
For Barton, the difference between the success and failure of a new drink is tiny - just like the margins between victory and defeat in sport. "The rarefied atmosphere of business and sport are exactly the same," he says, gesturing at Heaslip next to him.
"You've got to have a team that are willing to go that extra mile because that is what it is going to take to be successful. Whether it is your funding partner, your shareholders or your elite ambassadors... are you all going to go that extra mile to make it a success?"
The answer to that, he says, will make or break the entire plan.
CEO, C7 Brands
Studied economics and sociology at King Alfred's College, Winchester
Ernest & Julio Gallo
I mostly read newspapers
Divorced, three sons aged 12, 11 and 10
My kids, cricket and general fitness
The Last of the Mohicans
Favourite holiday destination
I haven't had one in four years
Sunday Indo Business