Nestlé Sells Sweet Leaf Tea and Tradewinds

Sweet Leaf Iced Teas
Nestlé Waters North America (NWNA) announced the sale of its Tradewinds ready-to-drink and Sweet Leaf Tea brands to Dunn’s River Brands for an undisclosed sum. Dunn’s is a portfolio company of Texas-based private equity firm Fireman Capital Partners (FCP). Dunn’s was founded by Lee Brody, Ian Knowles and Kevin McClafferty, who serves as president and CEO. This is the partnership’s first acquisition. Fireman Capital has a successful track record financing consumer and beverage products, such as their current craft beer platform CANarchy, Surfside Coffee Co. and legacy juice brand Evolution Fresh. "With FCP's support, we are well-positioned to attract world-class beverage brands and support the next generation of beverage companies," said McClafferty. He said the company expects to add more brands to the portfolio in the new year. Dan Fireman, managing partner of Fireman Capital Partners, said, “We are excited to partner with the highly talented Dunn’s River Brands team to build a world-class beverage platform. The Sweet Leaf Tea and Tradewinds brands represent a terrific foundation for the Dunn’s River Brands (DRB) portfolio as consumer demand for specialty, local and functional beverage products continue to increase. I am confident that FCP and DRB’s combined consumer and beverage sector expertise will position the DRB platform for long-term growth and success.” In a press release, Fernando Mercé, president and CEO of Nestlé Waters North America described the transaction as “part of our ongoing strategy to focus on strengthening our core business and drive performance through streamlined operations." "We took this difficult but important step to position us to further deliver upon our healthy hydration ambitions," he said. Sweet Leaf, founded by Clayton Christopher and David Smith in Beaumont, Texas, in 1998, is slow-brewed and certified organic. The company relocated to Austin in 2003. In 2009 Nestle acquired 35 percent interest in the company for $15.6 million with an option to buy. Sweet Leaf acquired Cincinnati-based Tradewinds Beverage Co. in April 2010. The combination was purchased by Nestle in 2011. Combined sales were $53 million at the time. The enhanced distribution capabilities of Nestle boosted sales but segment leader Honest Tea, owned by Coca-Cola, retained its popularity, earning $53 million during the 52 weeks ending Dec. 3, according to Chicago-based market research firm IRI. In 2012 the company switched from the original recipe of brewing leaves to organic tea concentrates and increased the number of flavors to 14. Sales of pure-cane sugar sweetened Sweet Leaf tea and lemonades are estimated at $10 million annually. Tradewinds tea in cans and bottles earned $35 million in food and drug stores, convenience and department stores (including big box retailers)* during the same period, according to IRI. Sales are down 17 percent for the year. Unit sales are down 20 percent compared to the same period during the previous year. Nestea in cans and bottles generated $22 million in sales during the period, down 5 percent compared to 2016 but units sold were up 10 percent an indication of discounting. Lipton is the category leader with $1.6 billion in sales, up 6 percent for the year, followed by Arizona Beverages and Snapple teas, both of which lost market share. The entire category grew 2 percent in sales to equal $3.65 billion with unit sales of $2 billion, a 3 percent increase over 2016. In September NWNA purchased Blue Bottle coffee and two months later purchased Chameleon Cold-Brew, which join billion-dollar brands Poland Springs and Arrowhead Waters. The acquisition is expected to close by the end of the year. Sources: Reuters, Fireman Capital Partners *Retail sales data attached for the categories/segments listed and top five vendors/top 20 brands per, latest 52-week period ending Dec. 3, total US multi-outlet with C-store (grocery, drug, mass market, convenience, military and select club and dollar retailers).