135. Building a Beverage Brand with Bawi

Victor Guardiola and Jordan Hicks

Jordan Buckner: [00:00:00] Building a beverage brand, as we all know, has a ton of challenges and obstacles, but if you can find success, a lot of beverage brands can reach a really large mass appeal, which is super exciting. And for the day's episode, I wanna kind of talk through a. Some of those areas as brands are navigating kind of building a beverage company.

And for that, I've invited on Victor Guardiola and Jordan Hicks, who are the co-founders of Bawi. And they're on a mission to put a modern twist on Aguas frescas by creating a health conscious and bubbly version of classic Mexican beverage made with organic fruit juice. Welcome, Victor and Jordan. 

Victor: Thanks so much.

Excited to be here. Yeah, thanks for having us. 

Jordan Buckner: So I'd love to kinda start at the beginning and kinda learn about , your company, how you get started. I know you mentioned you originally started as a farmer's market brand. What were some of those early days like, and why did you decide to start a beverage company?

Victor: Yeah, yeah. We can give you , the overview of kind of the process , of creating Bawi. But really, like you mentioned, , we started , very early [00:01:00] scale. Within farmer's markets and even before then, we started at an entrepreneurship program here in Austin at UT Austin. And that program helped us get our bearings in terms of figuring out whether or not a ready to drink a better for agua fresca has likes to stand on and through the practicum we kind of realized , that the product itself cultural relevance aside. Has some legs to stand on within , the industry as this kind of middle ground caloric beverage made with natural flavors. Right now, , our course views are between 40 to 60 calories with a really clean label, so usually just organic fruit, juice, water, and in two to three flavors, a little bit of organic cane sugar, which stays true to the the agua fresca recipe.

So after , the practicum, we knew we wanted to give this a shot and really trial it out. And the best way to do that is to obviously figure out a way to sell your product within some verifiable sales channel, which is exactly when , we decided to. [00:02:00] Launch into the Barton Creek Farmer's Market here in Austin, where our ambition was to prove out whether the product truly had some semblance of product market fit and also self-fund the development of the business.

And that was several years ago, and we were there for roughly four or five months. You know, serving it on tap , every single Saturday. And then Covid kind of reared its head and nuked on onsite consumption , to which we quickly had , to pivot and figure out how to fundraise to really get this thing off the ground.

Jordan Buckner: So tell me about those early days of kind of fundraising, especially if you're doing it during covid, and that was a huge challenge, right? No one was really sure where , the market and the world was going. So what were you able, to accomplish while doing that? 

Victor Guardiola: Yeah I'll speak more sort of the fundraising side and Jordan can kind of Address us building this operational system and sales system.

 Yeah, , we chatted about this kind recently too. What was interesting about [00:03:00] fundraising during the pandemic was most investment activity kind of slowed to a complete halt as everyone was just hunkered in. But that also gave us an opportunity to reach out to a lot of people who now had significantly more open schedules and were willing to chat with us. So genuinely , we just sent it up, cold emailing. Tons of people hundreds if not thousands by the time , we got , our first investment and we were lucky enough , to land an investment from , a local entrepreneur here in town. Patrick Terry from Terry's burger stand. That kind of got the ball rolling, but speaking more so to the mechanics of , the fundraising process , and furnishing samples. It was it was very ad hoc. You know, we would have some prospective investor say that they're down to meet up with us, and Jordan and I , would make the samples you know, as needed in these little champagne bottles to meet up with them.

Jordan Hicks: Yeah. You know, from an operational standpoint as Victor mentioned, you know, it was kind of , an interesting [00:04:00] time to be fundraising. So we didn't have a ton of, you know, early success right outta the gate. Which, you know we didn't have a ton of cash of our own , to throw into the business, so it was really dependent on getting the cash to really get started, but in the background, you know, we did as much as we could as far as just kind of lining up the dominoes to start falling once that first check hit. So we were doing a lot in the background, obviously, you know, exploring a few different agencies on, you know, kind of building , the brand identity a little bit, but also doing a lot in the background figuring out how to take this you know, farmer's market formula that we had. That was using, you know, fresh pressed juice and putting it into a, you know, ready to drink format that was shelf stable and, you know, wasn't gonna explode in a can or, you know, separate over a week or spoil over a week.

So it was a lot of just kind of like getting our ducks in a row and just kind of lining it up to get it to a point that once , we did have enough cash to get going, you know, it was kind of [00:05:00] a little bit more off to the races. 

Jordan Buckner: I know a lot of the beverages starting out, you were kind of making by hand.

When did you make the transition to working with a contract manufacturer and what was that process like? 

Jordan Hicks: Yeah, so we were hand making the agua fresca for a pretty long time. I had actually stolen a bunch of home brew equipment from my uncle who was a big home brew guy. So we kind of had , some type of production processes in place.

But you know, , we made that transition to the more manufacturing larger scale side of things once we got the check. And that looked like. Basically calling a bunch of breweries around town and hopefully convincing them to let us squeeze in some line time. If they had a canning, you know, operation going and luckily we did find one. There was an awesome brewery who unfortunately isn't around anymore. But called Addle Bird's Brewery which is funny enough, a few blocks away from where , our warehouse is now. But it was just a small little brewery here [00:06:00] that you know, was really just kind of a local dive spot.

And they had some really great brews, but they had A really nice canning line, a really nice canner. And the gentleman that was running it, his name was Scott was very knowledgeable in the beer industry and really helped us kind of dial in the production side and what was really nice about that, I.

Compared to, you know, finding a broker to help sell you into a co-packer or finding a co-packer that you know, do a run that meets the M O Q at that large scale. It really allowed us to kind of get our hands dirty and really figure out what works and what doesn't work with our formula. And luckily our formula , is pretty easy to You know, kind of tinker with, it's really just fruit, juice, water and sugar in two of our three SKUs.

But you know, , it really allowed us to kind of figure out what the production process should look like, shouldn't look like, what works, what doesn't and what those pain points look like, which helped us, you know, Roll into some of these larger co-packing conversations with a little bit more [00:07:00] understanding of the general flow and some more confidence to, you know, kind of roll into it because it's a little intimidating.

At first, 

Jordan Buckner: do you remember how many units you had to produce for your first co manufacturing run or about. 

Jordan Hicks: Yeah. You know Scott , was very generous with us. We really leaned into the young and dumb kid angle. 'cause back then we were like 21, 22, just like, Hey, you know, we had this idea.

We want to figure out how to do it. And he was lucky enough to, you know, not enforce any crazy MQs. He is like, yeah, I mean, We can, you know, get it into a keg. And then if you guys want a canon, we can canon, if you guys wanna just roll around with a, you know, a tap the same way you guys have been serving in the farmer's market, we can do that.

So really we just started batching, you know, with like one keg MQs per sku, which was, you know, super attainable for us, luckily. But yeah, no, huge, massive. Can runs or anything like that out of the gate. It was a lot smaller scale, which we were very lucky to have. 

Jordan Buckner: Yeah, that's awesome.

You know, 'cause I talked to Beverage Brand, they're like, you [00:08:00] know, I have to manufacture 10,000 cans of three different SKUs and out the gate I'm starting with 30,000 units that I have to sell, which is definitely a challenge. So it sounds. Like a huge benefit of you guys having to start just, you know, at the keg level and a couple cans after that.

So, Victor, talk me to you about how you took that initial kind of run and you started getting product, and what was your process like of selling that in? Did you immediately go to try pitch the whole Foods or go to pitch to his local independence around Austin? Like what was your process of getting , into market?

Victor: Yeah, we most certainly did not immediately try to pitch , to Whole Foods. I think that probably would've scared us a bit too much. We had a couple small wins early on that kind of set the momentum to get us going. Within Austin Jordan had worked at a sales capacity previously, so he knew how to sell into accounts quite well at an intimate level.

And we started piecemealing some Austin accounts here and there. But some of our big [00:09:00] wins where other brands like Ste Food started was a co-op here in town called Weeds. Food co-op and we slowly started adding more accounts. But , the two bigger ones we ended up getting during , our first six months in market was Central Market here in Texas.

We got in during Hispanic Heritage month around September. It's hbs sort of natural chain. Here in town where we ended up seeing quite a lot of success. And besides that, we also saw that Foxtrot market based outta Chicago, they had a wonderful program called the up and commerce program for minority owned and woman owned businesses, and we applied for it. we didn't win, but we were finalists there, which got us placement within the store and we ended up doing a lot better , than we thought we would do in the Midwest as an Agua Fresca brand. And it's gone on to be one of our most significant metros really we're focused in. Three areas [00:10:00] geographically, aside from , the Sprouts national activation, we recently were able , to get, but really we're , in Texas, California, and in the Chicago area.

But a bulk of of the business year one was sort of a central markets and foxtrot. And then later on we were able to piecemeal more and more accounts and then get a lot bigger activations than year one, but it kind of scaled up rather quickly from a, a door count perspective as these bigger name accounts started wanting to offer US placement and many more stores than you know, , these smaller chains , we're used to in Austin.

Jordan Buckner: About how many doors are you in now?

Jordan Hicks: Yeah, we just broke 600 a few days ago. So, yeah, you know activating sprouts , was a real big bump to our door count, but that also opened up some national distribution that's been trucking along really well too. But yeah, just a little over 600 doors as of today. 

Jordan Buckner: That's really exciting. You [00:11:00] know, one thing that's A really fun kind of challenge to navigate is when you start giving above that 500 door count and you can't go to every single store to see how your products are doing.

And so how are you thinking about managing growth to make sure you're maintaining velocity and sell through and identifying problems as you start to grow closer towards a thousand? 

Jordan Hicks: Yeah, that's actually something that's been super top of mind. You know, we got some really, really great DSD distribution , and that's what , we're really focusing in on as far as supporting some of , these retail doors.

You know, obviously building a great relationship with those DSD you know, Store , or, you know, route guys you know, all the people in between, just doing whatever we can to kind of get them situated and dialed into to our product and our brand and stoked on it, obviously. That's been , our main goal.

And then obviously, you know, demos is always great where we can but really just, you know extending a hand to the You know to the retailers is as [00:12:00] often as you can. Just checking in and building, you know, a more personal relationship has been , super helpful for us. 'cause like I mentioned earlier, you know, we lean into just being like, you know, young kids trying to figure it out.

But it's helpful to just extend the conversation and be like, Hey, you know, If you guys need anything, just let us know. We'll figure it out. And that's been pretty helpful. But DSD , is definitely been pretty beneficial , in kind of helping us keep a lean team. But, you know, scale quickly too.

Jordan Buckner: You know, I think that's really exciting to know in terms of that, and for those who don't know, right? DSD stands for direct store delivery partners. And a lot of times they will do everything from not just distribute your product to the store, drop off the back door, but actually make sure it gets on shelf and even do a lot of merchandising.

So as the partner, we're working with kind of doing everything full through merchandising for you. 

Jordan Hicks: Yeah, , as much as we can get 'em to yeah, , they've been super helpful with merchandising, especially with some of these fun, you know, kind of trial activations, you know, getting , some good end cap placement is always important.

But yeah, you know, [00:13:00] we've been leaning on them , as much as we can for sure. 

Jordan Buckner: How familiar , are you finding the market with Agua Fresca as a drink, as a category? I'm familiar with it. I know I'm pretty sure like in Texas and California, there's a pretty good awareness, but have you had a lot of people ask like, what is agua fresca?

Or is there a high educational threshold? Are you finding most consumers that you're targeting already or familiar with it?

Victor Guardiola: I think what's pretty interesting in one of our assumptions going into it, was that the level of consumer knowledge , for a beverage like Agua Fresca is significantly higher than a lot of other new entrants that are bringing these new beverages into the marketplace. As agua fresco's proliferation within hispanic food and beverage culture , is really quite broad. You know, you go to any taco truck coast to coast, you're going to find some form of agua fresca just as yet to be commercialized and distributed at scale yet. , but to your question, absolutely there's still a little more consumer education that [00:14:00] needs to be done around Agua Fresca, but it seems that other beverage brands Are pretty confident about the ability for the category to succeed, as we've seen from a couple of the new entrants to come into this space, including Minute Maid launching , their own agua Fresca as of recent.

So there's a really. Interesting thing that happens for brands like us, whenever , a large beverage conglomerate or a large C p G conglomerate makes a version of the product and nationally distributes it seemingly overnight, because , it sort of allows us to go through the consumer education hurdle of educating these groups in the Midwest or otherwise on what an agua fresca is because, They have , the dollars so to speak, and the reach to show people what agua Fresca is in the areas that might not be as familiar or don't have as strong as of a Hispanic culture.

Jordan Buckner: Yeah, that's a really great point. I remember , when they launched and there was another brand they [00:15:00] posted about like, oh no, they're like gonna kill the cat. They might like take, try to take over the category for us, but might not be as authentic within their and I think that something, as you mentioned, where they are able to educate a lot of consumers and then the ones who are more likely to choose Bawi are able to like, hey, like this is something I wanna try because it's unique and from a smaller brand that I wanna be able to support.

So with the success that you're having so far, what are the biggest challenges for the next stage of growth?

Victor Guardiola: Yeah, I would say , once you hit a certain scale, what we're finding, you know, within , the C P G business you. Have to get to a point where you have to develop the economic fundamentals of the business in order to continue growing. Otherwise, you are more or less at the will of your ability to raise growth capital if you do not have a good grip on your core unit economics.

So, you know, , these production runs are getting significantly larger and are requiring. A lot more working [00:16:00] capital than they were at our previous scale. So really , not really the problem we're facing, but the challenges of brands at our stage is figuring out how to produce at scale, with keeping cost in mind.

So a lot of variables start coming into play. Around cash conversion around managing extra personnel. You know, , you're graduating from a team of two or three into having to have more people join the organization. If you simply want to keep growing at a similar rate you are. So really, it's economies of scale.

And management at this point seem to be. The two biggest things we have to be working on this year. 

Jordan Buckner: And tell me about the launch with Sprouts. It sounds like a really great opportunity to take Bawi nationwide. 

Jordan Hicks: Yeah, yeah, so , we partnered with Sprouts through their innovation program. So , it's kind of a 90 day trial and depends on how the product, you [00:17:00] know, sells.

So far , it's struck along really well. So we're, you know, obviously keeping our fingers crossed, but yeah, you know, it opened up some really good exposure for us , in states that we haven't been able to penetrate. With our limited distribution footprint. So we're super stoked on that. And obviously it's gotten us , some really good buzz with you know, people , in the territories that we're already a little bit more saturated in especially Texas and California.

But we should know here in the next. Few weeks , on whether that is, you know, a full-time program or not. But nonetheless we got a lot of really exciting things in the pipeline as far as retailers and, you know, fun food service partnerships and stuff like that goes. So it was a really good little stress test for us to kind of trial a national activation and.

You know, obviously, fingers crossed, we you get to keep working with them. But we'll see. You know, , that's the name of the game with some of these short-term trial authorizations. , it's really a good stress test to see how your team can handle , a big national rollout, especially working with, you know, activating a new broadliner, which can [00:18:00] be. A very fun thing to manage and explore , as you know, first time founders in early , as an early stage brand. But yeah, you know, we'll see you in do time. 

Jordan Buckner: I love that. Well, Victor Jordan, thanks so much for being on the show today and looking forward to following your journey from here. 

Jordan Hicks: Thanks so much for having us. 

Victor: Thanks for having us, Jordan.