Alani Nutrition’s major seller is its line of energy drinks, but the brand also offers pre-workout powder, protein bars, and other products in the sports nutrition space.
Christopher Fryer
The idea for Phocus was developed in a place fueled by caffeine: medical school.
John Mittel, co-founder of the caffeinated flavored water brand, said during his time studying to become a doctor, there were a lot of long nights doing homework and projects. He wanted caffeine to stay awake but disliked coffee.
“I would drink diet soda, and I would drink energy drinks,” Mittel said. “Second year, it really started to catch up with me. I didn’t feel great, it didn’t keep me going. I’d have to crash.”
At first, Mittel didn’t think he would be the one to create a product that provided a solution. He started looking for caffeinated waters instead of energy drinks, but he couldn’t find any that he thought tasted good.
In October 2015, Mittel and eventual co-founder Tom O’Grady were talking about business ideas, just for fun. Eventually, the idea of caffeinated water came up.
“[O’Grady] would always ask you for a business idea, and we had about 1,000,” Mittel said. “990 were terrible. Nine were either too expensive or had been done before. And the last one was Phocus.”
There’s more on Mittel’s entrepreneurial journey on below. But his story is just one of a few successes Louisville has seen in the specialty beverage industry of late.
The specialty food and beverage market had a global value of $150 billion in 2021, Data Bridge Market Research reports.
The publication said specialty foods and beverages are food products that provide nutritional value and health benefits, oftentimes from various additives.
David Dafoe, founder and CEO of Louisville-based beverage developer Flavorman, said the trend toward health is only just beginning. The movement toward nonalcoholic, health beverage companies is powered by young people.
“Younger folks want things that are natural,” Dafoe said. “They don’t want any preservatives … and they want things that help lots of functions.”
Flavorman works for several national companies like Crispin Hard Cider, Formula O2 and Jones Soda. Dafoe said he’s seen the specialty beverage market grow in the past decade.
Every generation has its thing, and Dafoe said health trends are characteristic of younger crowds.
“We grew up in the Pepsi generation,” Dafoe said. “Pepsi and sugar and all those things that are seen as not as good for you anymore, we were used to all those but [younger generations] are not. They got brought up, oftentimes by parents who fed them organic baby food.”
Beverage Industry, a trade publication, reported “better-for-you” drink options have been on the rise in recent years, specifically surging in 2020 amidst a health-challenging year. The sports and performance drink category grew 15.6% in the U.S. in 2020, totaling more than $8.2 billion in sales.
This city will likely always be known for its alcohol brands, thanks to the booming bourbon industry.
But several brands like Alani Nu, Phocus and Elixir Kombucha have created a name for themselves locally — and in some cases nationally — showing that Louisville has a lot to more to offer.
Alani Nutrition’s reach has expanded far outside the Derby City, although its operations are headquartered right here in Louisville.
The brand evolved out of co-owner and Louisville native Katy Hearn’s fitness platform. Max Clemons, CEO of Alani Nu, said Hearn and husband Haydn Schneider had been building up a large social media following, posting tips for health and wellness, as early as 2010.
“They were getting very popular on Instagram before Instagram was what it is today,” Clemons said. “They were doing online fitness plans and programs way before a lot of people were doing it. We kind of call them one of the pioneers of … online fitness programs.”
Although several brands wanted to sponsor the duo, Clemons said Hearn and Schneider, who have a combined total of over 2 million followers on Instagram, realized they’d have more autonomy over the products they’d be representing if they just created a brand themselves. Bringing on Clemons and Trey Steiger, the four co-owners launched Alani Nu in 2018.
With its energy drinks being a major seller, the brand also offers preworkout powder, protein bars, and other products in the sports nutrition space.
Clemons said one of the main things that sets Alani Nu apart is its focused audience. When developing the brand, the co-owners realized many sports nutrition products are aimed toward men instead of women.
“We were specifically building the brand for, I would say the 18- to 40-year-old females, because we felt that the sports nutrition space was very underserved for that audience,” Clemons said. “You go into some of these supplement stores … 80-90% of the store just felt like it was created for men. And we said there’s something wrong with that.”
That was especially true for energy drinks. Clemons said women seem to drink coffee just as much as men, but energy drinks were always marketed more toward men than women.
Over time, Alani Nu’s caffeinated beverages became its most well known. Clemons said the brand is the No. 8 energy drink in the U.S. in terms of sales as of this reporting, and they hope to finish the year at No. 6.
Alani Nu started as an e-commerce company, but quickly grew to being sold in mainstream retail operations. Clemons said the brand first hit the shelves of GNC in 2019 and made it into larger stores like Kroger and Target by the end of 2020.
The company’s products are now in all 50 states with the intention to expand into Canada, the United Kingdom and Australia in the next year or so. Clemons said Alani Nu is the No.2 energy drink sold at Target.
Alani Nu was the third fastest-growing private company on Louisville Business First’s Fast 50 list in 2021. It had 2020 revenue of $68 million, a 700% increase since its start in 2018.
Clemons attributes the growth to three things. The first is having something great to sell.
“You have to have an incredible product,” Clemons said. “It has to taste great. It has to look great, no doubt about it. If you do not have an incredible product, your life will not be long, in terms of your business.”
Alani Nu
Year founded: 2018
Headquarters: 7201 Intermodal Drive
Top executives: Co-owners Katy Hearn, Haydn Schneider, Trey Steiger, Max Clemons (CEO)
Employees: Over 100
Number of locations that sell its product: 62,000
Annual revenue (2020): $68 million
Website: alaninu.com
The second is marketing. The company has been able to carve a place for itself in the beverage industry by giving attention to an audience that other brands weren’t. He said it was important for Alani Nu to position itself against other brands and create awareness.
Hearn’s social media following and the brand’s strategy with influencer marketing has helped the company be successful.
The last is creating lasting and scalable partnerships with retailers, distributors and others along the supply chain.
“If you have all of this marketing, and everybody wants the product, your product’s great, but then, let’s say, nobody can get your product? Well then it doesn’t matter,” Clemons said.
While the brand has experienced explosive growth, there are still goals to be reached. The company measures sales in how many “doors,” a.k.a. brick-and-mortar stores, the product is in. The most recent data shows the energy drink had sales in 62,000 doors across the U.S., Clemons said.
That’s compared to Alani Nu’s biggest competition, Monster and Red Bull, which is likely in over 230,000 doors. He said they are hoping to be in 90,000 doors by the end of the year and 150,000 by the end of 2023.
Phocus had its soft launch in October 2017 and sold out before the end of that year. After that, co-founder John Mittel deferred his residency in medical school, and he and Tom O’Grady decided to give Phocus a real shot.
The brand made it in the Louisville division of Kroger in August 2018. At first, however, it had no shelf placement. The drinks were only in displays throughout the stores.
“We had to put displays in everywhere and work them every single day for about a year and a half,” Mittel said. “Then in April of 2020 … they put us on the shelf.”
They started on the shelves of about 90 Louisville-division Kroger stores. In November 2021, the brand expanded into 150 Atlanta Kroger locations.
Starting this past February, the drink can be found in Kroger and Kroger affiliates in Nashville and Knoxville, Tennessee, Ohio, Indiana and Chicago, as well as other retailers in the Northeast and Texas.
One successful marketing tool for the company has been selling to corporate offices. Mittel said you can find Phocus cans in offices like JP Morgan, Morgan Stanley, Netflix and Instacart.
The company was specific with its branding because it wanted to create a can that looked natural in a professional environment, whether it be an office or hospitals.
“I didn’t feel confident carrying around a Monster or Rockstar in the hospital,” Mittel said. “We want it to be a functional and ‘better for you brand,’ but we also want it to be something that you wouldn’t mind if someone asked what you were drinking.”
Mittel said the product’s demographic tends to skew toward women ages 35 to 55, with the consumer split 65% female and 35% male. They also tend to be college-educated and heads of households, Mittel said.
With its headquarters off Zorn Avenue, Mittel said the company is pacing to have revenue of over $5 million for 2022.
There are a few things that sets Phocus apart, Mittel said. For one, it’s the personal experience. Mittel said he saw in the hospitals all the health problems that can be caused by living unhealthy lifestyles. The founders knew they wanted to create a product with no sugar or sweeteners.
“The World Health Organization says that 80% of chronic diseases are because of what we eat and drink,” Mittel said. “It starts from what we consume. Trying to get ahead of it with medication and treatments like that are obviously what we have to have, but it really does start with just changes in people’s lifestyles.”
Phocus
Year founded: 2017
Headquarters: 2726 River Green Circle
Top executives: CEO Todd Creek, co-founder and Executive Chairman Tom O’Grady, and co-founder and President John Mittel
Employees: 16 full-time employees
Number of locations that sell its product: Over 3,000
Annual revenue: $5 million-$5.5 million
Website: drinkphocus.com
Another is where it gets its caffeine. Mittel said the caffeine source in Phocus is from tea instead of coffee. This has to do with the fact that growing tea is more sustainable for the environment, as well as tea gives a more Zen buzz where coffee can give jitters.
Mittel said their long-term goal is creating a brand that won’t be a flash-in-the-pan.
“I think the role of an entrepreneur is giving something back that improves people’s lives,” Mittel said. “I think there’s so many ways for us to expand the brand. … You’ll get a lot of really quick adoption, especially in a world where a TikTok trend lasts for 12 hours. It can be the same thing for beverages.
“So how do you establish something that’s going to be here for the next 100 years?”
Although not as caffeinated, another drink on the rise is kombucha. The health beverage, made from fermenting tea, generated $2.3 billion in sales globally in 2020, according to trade publication World Tea News, and it’s expected to continue growing to $4.5 billion by 2028.
One of a few kombucha brands in Kentucky is Elixir Kombucha, operating out of the kitchen incubator Chef Space in the Russell neighborhood.
Corey and Danielle Wood, owners of Elixir Kombucha, got their start making kombucha in their kitchen for friends 10 years ago.
“We were gifted a culture almost 10 years ago, so we started home brewing,” Corey Wood said. “And at the time, she didn’t really like it.”
“Oh, I hated it,” Danielle Wood said.
The couple perfected the taste, then happened upon an opportunity to begin selling. Corey’s sister noticed a local juice bar was out of kombucha and suggested the Woods’ start selling their product. That was December 2015, and by the following April, the company had officially set up in Chef Space.
Elixir can be found in Whole Foods locations in Louisville and Lexington, local grocer Rainbow Blossom, as well as 150 other independent retailers across the state, Danielle Wood said. The product also is at quick-service eateries like Quills Coffee, Green District Salads and Shiraz Mediterranean Grill.
The company is on the precipice of expansion as well.
Elixir Kombucha
Year founded: 2016
Headquarters: 1812 W. Muhammad Ali Blvd. in the Chef Space incubator
Top executives: Co-owners Corey and Danielle Wood
Employees: 3
Number of locations that sell its product: Approximately 175
Annual revenue: N/A
Website: elixirkombucha.com
Corey Wood said Whole Foods is planning to expand the brand to its Cincinnati and Columbus, Ohio, stores.
Across the entire Midwest region, Elixir is the most popular local kombucha brand at Whole Foods.
“Our products sell more than any other local-based kombucha,” Corey Wood said. “We have the No. 1, 2 and 3 spot — it’s blueberry pomegranate, lavender lemonade and pineapple ginger that are the top three spots across the whole Whole Foods Midwest.”
This expansion means big things for the company, including hiring more staff and moving to a bigger space. Right now, the company has three employees, including Danielle and Corey. It doesn’t have the capacity to make more product than it already does.
With its next phase of growth in mind, the company is going through a round of fundraising. The owners declined to disclose their fundraising goal.
Once funding is secured, Danielle Wood said they’d like to bring on one more staff member. In the next three to five years, they hope to have a staff of about 15. The owners declined to share annual revenue.
We previously reported the brand intends to open a tasting room in Epping District, a property on East Broadway being redeveloped by two local developers, Anna Sorrell and Rachel Zink. Elixir’s taproom will be located at 716 Logan St.
Louisville was a beneficial place to get started because of the already strong industry and culture around beverages.
Corey Wood said they made friends in the Louisville beer community, taking notes on how to brew and ferment at a larger scale.
They are also able to utilize Louisville Pure Tap from the Louisville Water Co. Just like bourbon, water is a main ingredient in kombucha, and having a great tasting local water helps for the final result to taste good as well.
The couple are excited to see kombucha grow in Kentucky, as there’s still a lot of opportunity in this market. They want to be resource for new entrepreneurs, just as the Louisville beverage industry was to them starting out.
“It’s an exciting industry to be in and we’re lucky to be surrounded by a lot of people with knowledge that’s adjacent to what we’re doing to help us think through the growing of the business as well,” Corey Wood said.
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