Recipe for disruption: How emerging brands are shaking up the food and beverage industry

Grocery chains are stocking their shelves with food from fancy restaurants, turning popular menu items into profitable products as consumers seek higher-quality home-cooked meals.

During the pandemic, restaurants had to think creatively to survive. Some establishments decided to turn their offerings into products that home-bound consumers could make on their own.

The gourmet entrees and premium sauces allowed restaurants to enter retail and provided them with a new sales outlet at a time when many of their competitors were going out of business, Joan Driggs, vice president of thought leadership at IRI, told Food Dive.

“It may not have been the same experience, but it did give new life to out-of-home experiences in the home,” Driggs said.

Nearly five years later, the move from restaurant to retail shows no sign of abating. Several higher-end restaurants such as Carbone and Momofuku are amassing more space in stores, enabling them to generate millions more in revenue and expanding their customer base in the process.

Marguerite Mariscal, CEO of Momofuku in New York City, said the company saw an opportunity to diversify by selling its air-dried ramen, sauces and seasoned salts in grocery stores.

It launched its first products in 2020 to capitalize on the surge in home cooking during COVID-19 before expanding two years later to big-box outlets such as Target and Whole Foods. The company is now prioritizing both its restaurants and retail, with plans to be in 11,000 stores by the end of this year.

Mariscal said a presence in CPG stores is a way to “future-proof” a business that previously only competed in the uber-competitive restaurant industry.

“The grocery aisle was still the same products that had been there for the past 20 years, and we thought there was the biggest opportunity in the most untouched area for us to explore,” Mariscal said.

The pandemic, she added, provided a major boon to the global flavors section of stores. This created an opportunity in retail for Momofuku — but it wasn’t one that everyone embraced.

“We talked to people from Pepsi, people from Campbell’s, and they all said to go anywhere else, that grocery aisles were the sleepiest place to be,” Mariscal said. “But we heard that and we saw an opportunity.”

Momofuku developed products for retail like Sweet & Spicy Noodles and Black Truffle Chili Crunch by tapping into 20 years of consumer data it had collected. It also leveraged the popularity of its founder, David Chang, who gained prominence with his Netflix series “Dinner Time Live” and boasts 1.8 million Instagram followers.

The company discovered 90% of the people who followed Momofuku and Chang on social media did not live in cities where they operated restaurants. The retail launch allowed the company to connect with people and generate sales it otherwise wouldn’t have.

Mariscal said Momofuku faced challenges in reformating its restaurant flavors to make them shelf-stable. The company hasn’t figured out a way, for example, to get its popular ginger scallion to maintain its flavor profile. Other innovations have been abandoned because Momofuku hadn’t found an ideal taste or price point.

“Navigating that and just making sure we’re both making a premium product but not something inaccessible, that’s really the balance,” she said.

The increase of items from fancy restaurants sold in stores correlates with the jump in market share for premium foods as many consumers seek a higher-end experience at home.

Jeff Turnas, senior vice president of culinary at Whole Foods, told Food Dive earlier this year that shoppers are still purchasing products they perceive to be of higher quality — such as sauces and breads — despite their price tag.

Driggs from IRI said even as cash-strapped consumers pull back on spending, restaurant brands are poised to benefit because demand for premium offerings continues to grow. To succeed in stores, the Circana executive said restaurants must get optimal placements on shelves and online, while leveraging the power of social media influencers.
 

Carbone’s pasta sauce pursuit

Two New York City-based restaurants, Carbone and Rao’s, have successfully expanded into the grocery market with premium tomato sauces. Both establishments at some point employed food industry veteran Eric Skae as the CEO of their retail divisions.

Rao’s — which was the crown jewel of The Campbell’s Company’s recent $2.7 billion acquisition of its parent Sovos Brands — debuted its sauces at retail stores in 1992. Rao’s has since expanded into soups, pasta, pizza and lasagna. Rao’s has just under $1 billion in annual sales and is posting double-digit growth. Its products were purchased by half of all U.S. households last year.

Carbone Fine Foods debuted its sauces in 2021, bringing the popular offering to shelves with premium ingredients and a higher price tag than most of its competitors.

Skae, who joined Carbone Fine Foods ahead of its launch, told Food Dive the goal was to replicate the restaurant’s recipes in a jar. In doing so, the CPG brand let the people who understand what made the restaurant’s formula work best chart its path.

The dining establishment’s founder Mario Carbone and his business partner Rich Torrisi were heavily involved in developing the product for retail.

“Both were very, very active in that process to a point where they would leave Manhattan at 3 a.m. and would be at our production facility in central Pennsylvania at 6 a.m.,” Skae said.

Carbone posted 80% year-over-year sales growth earlier this year, and it has expanded its lineup to include Alfredo sauce and pizza sauces.

Skae said Carbone Fine Foods is pursuing additional innovations in the sauce category. But like Momofuku, he said the company is still working on bringing certain flavors from its menu to the shelf without compromising quality. Skae pointed to pesto, which he can make taste “amazing” at his home kitchen, but is challenging to scale.

“If you’ve ever noticed, the pestos on the shelves get very brown. The leaves oxidize immediately, and the ones that are not very brown have something in them that I wouldn’t consider food.” Skae said. “Pesto is not a giant category, just one that makes sense for our brand.”

Skae believes his success with Rao’s and Carbone came from identifying that consumers would pay more for a higher-quality pasta sauce.

“There’s a big shift from value and middle of the road to premium categories, he said. “If I was looking at other categories I’d be looking at similar dynamics: where’s the opportunity, where’s the white space?”

Name: Mike Kurtz
 

Where do you live: Brooklyn. NY

Occupation:  Founder, Mike’s Hot Honey

Spiking sweet golden honey with a dash (or more) of sizzling hot chili pepper might never had occurred to Mike Kurtz, 41, but for a student trip to Brazil, where he stumbled upon a pizzeria offering up bottles of the spicy-sweet nectar to drizzle across their pizzas. One bite and Kurtz was hooked. 

Upon his return to the states, Kurtz eventually moved to Brooklyn and started a career in the music industry, while experimenting with different honey—and pizza—recipes at home. Like most New Yorkers, Kurtz also enjoys a good slice and convinced the now iconic pizzapreneur Paulie Gee to give him a shot in the kitchen so he could try out some of his experiments in a real pizza oven. As pizza-making skills improved through his apprenticeship, Kurtz brought some of his honey into the restaurant, eventually concocting the now classic Paulie Gee’s Hellboy.  

Kurtz, who had been giving bottles away to friends, eventually started selling it in the pizzeria. The demand convinced him that he could make a go of it, and Kurtz eventually dropped his day job and devoted himself to Mike’s Hot Honey full time. The winning combination is a blend of Brazilian peppers and locally grown wildflower honey and is available everywhere from Walmart to Whole Foods to tiny pizzerias across the country. Along with the availability expansion, Mike’s is entering into partnerships with other CPG brands. Kurtz sat down with us to explain what’s up with his beloved hot honey and where he sees the brand going next. 

FOOD DIVE: What was the first job you ever had?

MIKE KURTZ: I was a dishwasher at Amherst College Dining Services. That was the first of several jobs I had in food service. I used to cook a lot with my mom growing up, so I was always into food, but that was my first job. You know when you go into the college dining hall and put your dirty tray through that window and it goes on the conveyor belt—that was my job. I eventually got promoted to French Toast. So I had this giant flat top grill and I would make the wash for the toast and then I would do like 60 pieces of French toast at a time on a flat top grill. I’d just flip all 60 of them.

FOOD DIVE: What inspired you to focus on your current work?

KURTZ: I had been making Mike’s Hot Honey as a hobby for about seven years, when my passion for pizza led me to Paulie Gee’s, which is a Neapolitan-style pizzeria in Brooklyn. I’d been making a lot of pizza at home and I met Paulie when he was first opening the pizzeria. and I was eating there and came by the table and he started chatting about his dough recipe and his oven and could tell I was really interested and he invited me to become a pizza apprentice.

So I started working there, going after my day job, learning how to work the oven and make pizza and eventually I was fast enough that he put me on a dinner shift. 

I brought a bottle of honey in for Paulie to try and he liked it and asked me if I could make it for the restaurant to drizzle on the pizza. So they started using it there and it just became a hit. 

It became this bucket list menu item and I got pulled into the business. I had people coming up to me, asking me where they could buy bottles, and I wasn't bottling it or selling it. 

So it was something that really was born out of a demand for the product. People just seem to love it and it organically grew that way. I still worked my day job in the music business,  but eventually I transitioned into a full time honey business role. But for you know, for the first few years, it was a combination of working in the music business, working at the pizzeria making pizza and bartending, and slowly building Mike’s Hot Honey.

FOOD DIVE: What is the biggest change you have seen while working your current role?

KURTZ: For the first few years, I kept on hearing that hot honey was the biggest trend. You know, it's this trend and hot honey is trending. And you just hear that over and over again. And I think at this point, now it's become an established category in the supermarket. So we've gotten beyond this idea that this is just a trend, and it’s really here to stay. And the honey aisle, which was virtually unchanged for like 50 years, and now hot honey is now this new subcategory in that aisle. So it's gone from what the media and people were calling a trend to an established category over the course of this business.

FOOD DIVE: What was harder than you thought it would be? What was easier?

KURTZ: The part that was easier than I imagined was just creating demand, building demand for the product. I was very fortunate to have this thing that people loved. And they loved it before there was even packaging on the bottle. So that was a very good sign. 

When I was working at Paulie Gee’s, people kept on asking for bottles. So I knew if I built a brand around it, it could be really powerful. There are many great products in the CPG space that people love, but they don't they don't tend to share them or talk about them. And I think because our product is novel, something that people both love, but also want to talk about and share, that created this organic growth that has been behind the growth of the brand this entire time.

The hardest part was definitely scaling up production and finding somebody to help produce at that scale. It was really hard because the concept didn't exist, so there was no template for how to produce it. 

In the beginning, no one would take a chance on me. You need honey-specific equipment for a product like mine, so I was going around to different honey producers, looking for someone to help me, but almost all of them said no right off the bat because they were concerned with cross contamination. It wasn't worth the risk to them. I was just starting out, so I didn't have the volume to really incentivize anybody. Because if they ran my product and then cleaned up the line, and then ran pure honey on the same line, if there was any sort of residual chili pepper in the pure honey, it could ruin an entire batch so it just wasn't worth the risk. 

I was just rejected over and over again. I was surprised because I had a lot of press very early on, so showed these honey suppliers that there was demand. But really it comes down to money talks and if you're not ready to do a gigantic production run, they don't want to waste their time with you. 

I eventually found somebody who was willing to take a chance—and he didn't believe in me either—but he was willing to work with me to sort of MacGyver a production line. 

I had been expecting a more sophisticated production line, but when I got there, it was just this was garage attached to his house in Jersey. Sure enough, maybe four years later, we serviced 4000 Walmart stores out of that garage. We still work with him today. 

FOOD DIVE: What is a misconception that people have about you when they first meet you? 

KURTZ: For whatever reason, people expect me to be older than I am. I'm 41 but I think maybe it's the retro design of the packaging, but people assume that I'm like this old guy—like Bob from Bob's Red Mill. I've had a few times where people are just like, you're not Mike. I’ve had that happen a handful of times when people just think I’m lying. So I have to break out the business cards and prove it. 

FOOD DIVE: What do you think will be the biggest change in the industry in 10 years?

KURTZ: I think consumers are a lot more dialed in on who the people behind the brands they’re consuming are. There's a bigger focus on understanding what a brand stands for. It's like they, it may just be a food product that they're eating, but they also want to know what the values of that brand are. For us, that's been something we've tried to communicate to our consumers and we continue to work on that. You want to be transparent about what you stand for as a brand. I think you can show that in a number of different ways—through your partnerships, through the types of partners you work with, how you behave when you meet people in person, how you meet people in the digital space. . .  I think maybe 10 years ago, that wasn't as big of a concern for consumers.

FOOD DIVE: What do you wish someone would have told you about your current role or position when you started?

KURTZ: When I started, I was coming from a place where I was a little disillusioned from my work in the music business, and I was looking to be totally self-sufficient. 

So when I started, I was kind of like a monk—I was basically like, just in my kitchen working alone, laboring away, but I didn't have to rely on anybody and I really liked that in the beginning, but very quickly I learned that that wasn't gonna work. 

And so I guess I had understood that when you’re scaling your business, you need to know when to ask for help. 

I was very fortunate that my business partner (and current CEO of Mike’s Hot Honey) Matt Beaton joined the company in summer, 2015. As a one man operation for the first five years, I was fortunate that I was able to find somebody who had a very complementary skill set. I don't have a background in business. Matt—who I knew since my freshman year of college at the University of Wisconsin, in Madison—and his wife Erin came down to visit me in New York and I took them to Paulie Gee’s. 

They had the Hellboy, which was a signature pizza—with the honey—and I brought them up to speed on what I've been doing. When I was driving them back to their hotel, I got a blocking-the-box ticket, which I think only happens in New York. And about a week later, I got a package from Nueske’s on my doorstep, which is almost like Omaha Steaks, but from Wisconsin, and a note from Matt. It was basically like, ‘hey, really sorry, you got that block in the box ticket—here's some sausages! Oh, and by the way, if you're ever looking for a partner in the honey business, I'd love to help you.’

He was looking to get out of his corporate job and he had an MBA from the Kellogg School of Business at Northwestern. He and his wife Erin met while they were at Wrigley together in Chicago, so they both had a background in CPG. 

Wrigley is widely considered as a breeding ground for professionals in the industry. So he had a lot of really, really great experience that I just didn't have. I had that hustle mentality and knowledge of pizza and restaurants and the network in New York, and the skills to be the face of the company, but some of the backend stuff—I was just not prepared to handle. So when he came on that really helped. So really understanding what you need and understanding what skills you're going to need in a business partner or in a first hire, that knowledge would really benefit you.

FOOD DIVE: What would be the foods of your last meal?

KURTZ: I love pizza, I really do, but it wouldn't be my last meal. I've had enough pizza for multiple lifetimes. It would probably be a big bowl of pho from Pho Grand which is my regular spot on Grand Street in the Lower East. Side. That’s my favorite food. 

 

Sponsored content

By Fetch

Disruptor CPG brands have gotten very good at getting noticed.

They’re entering established categories with sharper positioning, new formats and products that respond quickly to changing consumer preferences. Shoppers are clearly willing to give disruptor brands a chance. Shoppers are clearly willing to give disruptor brands a chance. In the last 18 months, 52.3% of Fetch users purchased one, a trend visible across the 13M+ receipts Fetch sees every day.

But getting consumers to try something new and building a brand they buy for years are two very different challenges.

For emerging brands, the next phase of growth is less about proving there’s demand and more about turning that demand into scale. That means getting into more households, converting trial into repeat behavior and making limited budgets work harder.

The growth equation changes as brands scale

Early-stage growth can come from a concentrated group of enthusiastic consumers. Those buyers discover the product, talk about it and help establish credibility.

Eventually, though, the math changes.

To keep growing, brands have to reach beyond the consumers already predisposed to try something new. They need to find category buyers who haven’t heard of them, competitive buyers with established routines and households that may need a compelling reason to change what they put in their carts.

That makes household penetration increasingly important. The challenge becomes less about generating more attention, but systematically creating more relevant buyers.

Trial is valuable. Retention builds a brand.

Winning the first purchase is hard. Winning the second has become even more important.

A consumer may initially choose an emerging brand because the packaging caught their attention, someone recommended it or they were curious enough to give it a shot. But novelty alone doesn’t create a habit.

The brands that successfully graduate from challenger to category mainstay have to give consumers reasons to return. Acquisition and retention can’t operate as completely separate strategies: every new household represents an opportunity to build a longer-term relationship.

That requires marketers to look beyond the launch spike and ask a harder question: Are the consumers we worked so hard to acquire actually coming back?

Emerging brands can’t afford to optimize for the wrong signals

Scale introduces another challenge, deciding where the next marketing dollar gets put to use.

For brands with finite budgets, activity and growth aren’t necessarily the same thing. Impressions, clicks, engagement and cultural buzz can indicate that a campaign is getting attention, but they don’t necessarily translate to trial.

That distinction becomes increasingly important as brands expand distribution, enter new markets and compete for larger marketing budgets.

Purchase-based measurement can help connect marketing efforts with real purchase behavior and distinguish between consumers who happened to see a campaign and incremental buyers whose behavior changed because of it.

The opportunity is turning disruption into durability

The good news is that emerging brands don’t need the scale of legacy competitors to start building more sophisticated growth strategies.

They need clarity around three things:

• Who they need to acquire
• How they’ll encourage those consumers to return
• How they’ll prove that their investment generated incremental growth

That’s where platforms built around real purchase behavior can become valuable. Fetch, for example, helps brands acquire and retain consumers and ties outcomes back to real purchases through receipt-based measurement.

Among the disruptor brands included in Fetch's analysis of the past 18 months, Fetch drives an average 37% lift in household penetration and 18% unit lift.

But the bigger lesson extends beyond any one platform or campaign.

Emerging brands have already proven they can create excitement, challenge incumbents and convince consumers to try something different. The brands that define the CPG industry will be the ones that figure out what comes after that first purchase.

Disruption gets you noticed. Durability is what makes you a household name.

Dive Brief:

• Prebiotic soda brand Olipop is valued at $1.85 billion after raising $50 million in its latest funding round led by JP Morgan Private Capital’s Growth Equity Partners.
• The money will be used by Olipop to expand marketing, add flavors and increase availability in spaces traditionally dominated by legacy sodas.
• Healthier soda brands such as Olipop and competitor Poppi have surged in popularity as people look to curtail their sugar intake and increase their consumption of better-for-you products that contain functional ingredients.

Dive Insight:

Olipop, valued at just $200 million in 2022, has seen its valuation soar as consumers look for more in the products they drink.

Olipop is the top single-serve, non-alcoholic beverage manufacturer in dollar and unit growth, the company said, citing data from Circana and SPINS. Roughly half of its growth is from legacy carbonated soft drinks such as Pepsi and Coke, with the rest coming from new shoppers entering the category and current soda drinkers adding Olipop to their carts.

“It’s staggering and thrilling to have achieved a $1.85B valuation after just five to six short years in market," Ben Goodwin, Olipop’s co-founder and CEO, said in a statement, adding it's "a testament to the innovation breakthroughs and momentum we have demonstrated as the founders of the modern soda category." 

Olipop turned profitable in 2024, with sales doubling to $400 million year-over-year, according to the company. Goodwin told Bloomberg the latest funding round will advance innovation and help the brand enter into more retailers. 

Olipop is best known for its refrigerated sodas available in flavors like Cherry Vanilla, Banana Cream, Watermelon Lime and Vintage Cola. The company recently added a shelf-stable offering to its lineup, giving the functional beverage more space at retailers and enabling it to attract new consumers. Olipop reaches nearly 20% of U.S. households, the company said, providing it with a significant opportunity for growth.

The functional soda is sold at close to 50,000 grocers including Walmart, Target, Whole Foods, Kroger, Costco and Starbucks.

Olipop has positioned the brand as a healthier alternative to sugar-laden soda with 5 grams of the sweetener and fewer than 50 calories. The drink also contains prebiotic fiber that comes from chicory root, cassava root and Jerusalem artichoke to promote gut health. 

The presence of J.P. Morgan in the latest funding round will help promote the brand among investors and further its position as a profitable business. Olipop already has a lengthy list of celebrity investors, including the Jonas Brothers, Mindy Kaling and Gwyneth Paltrow, plus former PepsiCo CEO Indra Nooyi.

Goodwin told Bloomberg this will be the company’s last round of funding, but he hasn’t determined if he wants to take the company public or sell it to a larger entity. 

In addition to the latest funding round, Olipop appointed Mel Landis as its new president.

Landis, with more than 36 years of experience at business giants such as Coca-Cola and Kraft, will play a key role in growing the beverage maker. Landis is undoubtedly familiar with consumer trends and consumption habits, especially when it comes to sugary carbonated drinks.

Dive Brief:

• Coca-Cola is making its first foray into the prebiotic soda market with the launch of Simply Pop. The beverage will be in retail stores in select regions and online nationwide through Amazon Fresh later this month. 
• The beverage, which will be available in Strawberry, Pineapple Mango, Fruit Punch, Lime and Citrus Punch flavors, contains six grams of fiber for gut health, plus Vitamin C and zinc for immunity support.
• Better-for-you sodas have surged in popularity as consumers cut back on sugar consumption while turning to functional beverages that provide them with more than hydration.  

Dive Insight:

The healthy soda market has been dominated during the last few years by upstarts Olipop and Poppi. But beverage titan Coca-Cola is aiming to use its deep pockets and global reach to muscle into the fast-growing category.

“You would have to be under a rock … to not have seen the growth that is happening in the prebiotic soda space,” Terika Fasakin, senior director of brand marketing for Simply, told Marketing Dive.

Rather than launch a new brand, Coca-Cola is debuting its prebiotic soda under its 24-year-old juice brand Simply. The move enables the Atlanta-based beverage company to tap into Simply’s fruit-forward profile and brand recognition among consumers, attributes that can help the nascent soda stand out from its more established competitors. 

Despite the growth of functional sodas, Coca-Cola found the category only has about 20% market penetration, providing a ripe opportunity to attract consumers curious about prebiotic products.

A look into Olipop and Poppi provides a glimpse into the promise Coca-Cola sees in prebiotic soda. Olipop turned profitable in 2024, with sales doubling to $400 million year-over-year, according to the company. Poppi has done even better, with sales topping $500 million last year, Bloomberg reported.

Coca-Cola's launch comes a week after Olipop, valued at just $200 million in 2022, announced it was worth $1.85 billion after raising $50 million in its latest funding round. The recent investment, Olipop said, will be used to expand marketing, add flavors and increase availability in spaces traditionally dominated by legacy sodas, including products made by Coca-Cola.

Still, just because Coca-Cola is entering the prebiotic space doesn’t mean it's a guaranteed success. While many of its product launches — such as its Simply Spiked alcoholic offerings as part of its partnership with Molson Coors — have resonated with shoppers, attempts to enter trendy categories such as flavored water and energy drinks have yielded mixed results in recent years. 

In 2021, Coca-Cola discontinued sales of Coca-Cola Energy in North America after just over a year on the market as it streamlined its portfolio to focus on its better-performing brands. And two years ago, Coca-Cola announced it was sharply cutting the distribution of its short-lived Aha sparkling water as sales declined.

Chris Kelly contributed to this story.

For an upstart soda brand, United Sodas of America isn’t afraid to tussle with bigger, more established competitors.

The beverage, which launched during the early days of the COVID-19 pandemic, has caught on with consumers and distinguished itself from competitors with its clean label, low-calorie total and proprietary sugar and stevia blend — a sweetener combination company president Dan Herndon described as the brand’s “secret sauce.” 

The beverage also uses packaging to its advantage. Each soda variety has its own unique color, with the only text adorning each label being the flavor name, size of the can and “naturally flavored soda.” 

”We punch way above our weight class” compared to established brands such as Coca-Cola and Pepsi as well as newer entrants like probiotic soda Poppi, declared Herndon. 

United Sodas’ effort to reinvigorate the beverage category faces an uphill battle. After peaking in the late 1990s, IBISWorld said per capita soft drink consumption has fallen since as health concerns and higher prices deter consumers from drinking soda. This year, soft drink consumption is forecast at 42.8 gallons per person, according to the analytics firm.

The privately held United Sodas won’t disclose its financial data in detail, but Herndon said it posted “excellent growth” in 2023. It is forecasting a “minimum” of 60% growth this year as it prioritizes getting more of its cherry pop, sour blueberry and mango into additional wholesale, supermarkets and natural channels. Currently, United Sodas is carried in 2,500 stores across the country.

Herdon said the company has no plans to stray from its core into other beverage offerings.

United Sodas said some retailers have been clamoring for it to enter new markets and channels. It’s dabbled in a handful of locations such as convenience stores, college campuses and restaurants, but it’s been very “selective” about who it works with.

“We need to find good partners who want to build a solid business with us, not just grab the next hot thing,” Herdon said.  “The word is definitely out right now that we've got a great product. It's a cool product, tastes great. We want you. But we need to be smart and selective about where that goes.”

Herdon acknowledged that United Sodas has turned down some business because it wasn’t a good fit at that moment.

Kate Reeder, United Sodas’ chief operating officer, said the beverage’s birth during the pandemic taught executives about “being mindful with how they spend their time, energy and financial resources.”

A huge part of the company’s early strategy was inundating the market with a variety of flavors, she said. When United Sodas hit the market in May 2020, it debuted a dozen offerings.

Reeder said the brand believes Americans still love soda, but the needs of consumers are changing and most sodas don’t fill their interest in healthier beverages. United Sodas thinks it can fill that void. To make an immediate impact in the market and have consumers “buy into our vision of what soda could be,” she said United Sodas needed more than just one or two flavors when it launched.

Reeder said the brand rests on the foundation that Americans still love soda, but that many didn’t have one that fit their changing needs. To make an immediate impact in the market and have consumers “buy into our vision of what soda could be,” she said United Sodas needed more than just one or two flavors when it launched.

“Coke and Pepsi have played a role in culture for decades,” she said. “For us, to be the next iconic soda brand, we had to come out with the same gravitas so that people would see that even though we were a startup.” 

With sales for refrigerated bar Clio posting a compound annual growth rate of 50% annually, CEO John McGuckin could be excused for sounding upbeat. But the former Sabra hummus executive is not ready to rest on his laurels. 

“The product was always ahead of its time,” McGuckin said in an interview discussing the chocolate-covered yogurt bar. “Even though we’ve had some remarkable success, there’s a long way to go” to build awareness and market penetration.

Clio Snacks was founded in 2013 by former accountant and budding entrepreneur Sergey Konchakovskiy. He was motivated by the idea of getting his kids to consume more nourishing foods. After noticing they were curious about a batch of strained Greek yogurt in the fridge, Konchakovskiy came up with the idea to coat it with chocolate.

More than a decade later, the bar is flourishing. Sales this year are forecast at $60 million, up from $9 million in 2019. McGuckin is optimistic Clio could eventually near $500 million if the company can meaningfully boost consumption and household penetration.

Clio resonates with consumers because of its better-for-you mantra that includes the benefits of Greek yogurt, such as protein and probiotics, as well as the portability that makes it a convenient snack, he said.

These attributes have made the product a hit with a diverse range of retailers, with everyone from Walmart and Whole Foods to BJ’s Wholesale and natural food outlets, carrying it in their stores. Clio has recently prioritized foodservice and convenience stores as channels for growth.

A major obstacle that befuddled Clio is that retailers were confused as to where to carry its products. Some stores placed it in the $10 billion yogurt category, others with refrigerated bars and a third in deserts. 

“That was a big challenge for us because our consumers did not have a destination in mind when they went to the store,” said McGuckin, who took over the CEO post in October 2021. The unpredictability left Clio to depend on consumers stumbling upon it when they went shopping.

To help alleviate the problem, Clio studied the market share and distribution of Mondelēz International’s Perfect Bar, which also is a refrigerated bar offering. Executives at Clio noticed that Perfect Bar had carved out a presence between yogurts and deserts. Clio soon settled on further building out that category and eventually dominating it. “We’re having some success,” McGuckin noted. “But it’s still early.”

The refrigerated bar category has nearly doubled from two-and-a-half years ago to just under $200 million, according to Spins data provided by Clio.

The category is growing at 15% annually, with Clio growing at three times that rate. As a result, McGuckin said Clio is attracting consumers to refrigerated bars and drawing people away from shelf-stable aisles in the store. In May, it surpassed Perfect Bar in bars sold during a month for the first time. 

Clio still has plenty of other challenges ahead. Its household penetration currently stands at 2%. Supermarkets carry, on average, only 2 of its products — compared to six to eight at most Walmart and Whole Foods locations. In order to build scale and expand the category between yogurts and deserts, McGuckin said Clio needs to convince grocers to carry between four and six items. 

The New Jersey company has expanded its product line to include multipacks, which are conducive to retail and generate more revenue. 

Clio also recently debuted a bar that replaced the chocolate coating with plain yogurt in strawberry, banana or mixed berry flavors. This placated consumers who don’t view chocolate as a fit for breakfast, McGuckin noted, while helping Clio grow morning snacking occasions and opening up a larger market for kids and people who don’t like chocolate.

Clio has no plans to venture outside of bars anytime soon. It’s pondering adding granola or some other type of crunch to its products, or rolling out more bite-sized offerings for kids. The lone non-bar item McGuckin hinted at was the possibility of a drinkable smoothie.

“The results speak for themselves. We've grown a tremendous number of doors in the last two years,” McGuckin said. “People are beginning to see the opportunity. But I think we're still limited as a growing company with the extent to what the potential represents. And I think that's just a matter of building awareness.”

Celsius is growing its business to be a more powerful player in the beverage space starting with the launch of a hydration offering, a move that expands the energy drink giant’s reach with consumers while further pitting it against CPG giants such as Coca-Cola and Unilever. 

The debut of Celsius Hydration this week provides a deeper look into the Florida company’s long-term strategy as it aims to grow the 21-year-old brand with roots in physical fitness into a broader lifestyle offering.

Executives see Celsius eventually connecting with consumers throughout more parts of their day, from quenching thirst and providing energy to later on potentially helping with mental clarity and providing probiotics.

“This is a big opportunity to continue to grow our Celsius lifestyle brand and our portfolio,” Kyle Watson, chief marketing officer at Celsius, said in an interview. “[Hydration] felt like a really strategic move for us that wouldn’t ... allow us to lose focus on the energy category.”

The company chose to enter hydration because it provided the best opportunity to increase consumption of Celsius among existing users and to attract new individuals to the brand.

Watson said while many of Celsius’ energy drinkers enjoyed the beverage and its flavors, several said they wanted an option that didn’t include caffeine. They often would turn to another product to fill the void.

Celsius Hydration — which does not contain caffeine but is loaded with B vitamins and electrolytes — keeps existing users within the company’s portfolio while providing people, who may have avoided the brand because of the stimulant, a reason to try its products.

There also was a natural synergy between energy drinks and hydration. Roughly half of energy drink consumers were looking for hydration options to replenish electrolytes, Watson said. In many cases, people would purchase both during the same shopping trip.

The Celsius Hydration line features five flavors: Fruit Punch, Blue Razz, Strawberry Watermelon, Arctic Cherry and Lemon Lime. Each packet has 15 calories and is sugar-free. Celsius Hydration is currently available in powder through portable sticks conducive for on-the-go use.

Beverage makers thirst for hydration offerings

The hydration segment is growing rapidly, with beverage companies of all sizes introducing portable enhancer options to allow their products to bring more benefits to consumers beyond just quenching thirst. The global market for water enhancers is projected to nearly double to $5.7 billion by 2033, according to Straits Research.

Unilever bought electrolyte-infused beverage mix maker Liquid I.V. five years ago before the trend really took off, and it has rapidly grown the brand since the acquisition.

PepsiCo last September debuted Gatorade Hydration Booster, an electrolyte drink powder for all-day hydration, while sports drink BodyArmor, which is owned by Coca-Cola, entered the category in 2022 with BodyArmor Flash I.V. before bringing it to a powder format a year later. And Waterdrop, an Australian company, is selling electrolyte-infused hydration cubes with zero sugar that can dissolve in reusable water containers.

“There’s a ton of players, and it’s a lot of amazing competitors in the category and very established brands,” Watson said. “I think for us, we’re not setting out to own hydration [like we are with energy.] We’re really looking to drive incremental consumption, incremental consumers into our brand, and we want to play in the category and see where it takes us.”

A big part of Celsius’ future growth hinges on getting people to drink its products across more occasions.

The company is exploring other categories where Celsius could play, including helping consumers with mental focus or providing prebiotics or probiotics through better-for-you sodas. It’s considering bringing Celsius into other beverage categories that coincide with existing consumer trends and that mirror what users of the brand are looking for. 

“We’ve looked at all those and we’re evaluating the areas where it would really make sense for us to play,” Watson said. “There are several opportunities that we have in our sights as to where we are looking to go.” 

The company, which was founded in 2004, has matured as consumer interest in better-for-you and functional offerings — a trend that intensified during the pandemic — has accelerated. Celsius fits squarely into these categories with an energy drink that lacks sugar and calories but comes loaded with ingredients it claims provide workout and energy benefits without the crash. Revenue now tops more than $1.3 billion annually.

But Celsius recently has faced a slowdown in growth as consumers cut back on spending and competition in its core energy drink business from Alani Nu, Red Bull and others intensifies.

Robert Moskow, an analyst with TD Cowen, said in a research note last week that while Celsius has gained shelf space, product velocity has declined in the double-digits. He noted that Celsius’ market share has slipped to 9.1% compared to a peak of 10.9% in May 2024.

“We see the energy drink category getting more crowded with challenger brands adopting a similar ‘better-for-you’ positioning as Celsius,” Moskow told investors.

A new brand in the nonalcoholic beer space is turning to a comic book superhero to stand out, but the work of an alcohol veteran is what could determine its success.

Bero, founded by Spider-Man star Tom Holland, debuted in October with three beers inspired by the actor’s British heritage. The three varieties, each under 0.5% alcohol-by-volume, include Kingston Golden Pils, Noon Wheat and Edge Hill Hazy IPA.

This month, the beverages debuted at Target stores and on Amazon, which expanded Bero’s reach to nationwide consumers.

Grant Wood, the brewmaster at Bero, brings 40 years of beer category experience to the company. He previously served in an executive role at Boston Beer and founded Revolver Brewing Company in 2012, which was previously owned by Molson Coors before being sold to Tilray last summer.

Wood’s foresight of the category’s eventual growth led him to the startup. While attending a beer conference in 2018, he noticed an opening for ​​​​​​alcohol giants in the category to capitalize on nonalcoholic beer. Athletic Brewing had just made its debut.

“I thought that it would be a great thing for [Molson Coors] to do, that they could probably own the category if they got in and started, particularly with craft offerings,” Wood said. “I couldn’t get any traction, no one was really interested in it.”

Wood retired in 2020, but Bero CEO John Herman — a CPG veteran who previously served as the president of Nutrabolt — called him in 2023 with the pitch of joining a nonalcoholic beer startup with a celebrity. He said the offer was one he couldn’t refuse.

“We really wanted to keep it as simple as possible, as close to brewing without any specialized equipment, just like you would in a regular brewery,” Wood said.

 

Compared to other nonalcoholic brews that remove alcohol from brewed beer, Bero aimed to develop beer that was nonalcoholic from the start. According to Wood, this helps maintain characteristics unique to fermentation without needing to add them back in.

Bero joins the nonalcoholic beer market at a time of rapid growth. The category is projected to be worth $23.9 billion in 2025, growing annually by 9.3% through 2030, according to The Business Research Company.

Holland said in a statement last fall his inspiration to launch the brand stemmed from two years of sobriety, and the desire for alcohol-free craft brews that don’t compromise on taste. According to Wood, the actor previously enjoyed European lagers and an occasional IPA, and he wanted to improve them.

The two discussed what they liked about particular beers on the market. The movie star sampled many test brews before deciding on characteristics, including how much hop character the drinks should contain.

Growing interest in beverage ingredients, along with the wider legalization of cannabis products, are both factors driving young people away from alcohol, Wood said. At the same time, he doesn’t believe large beer producers selling zero-proof varieties of their flagship brews are fully invested in getting consumers to ditch their alcohol-laden counterparts.

“They’re doing it to have something on the shelf, so if someone walks in and they’re looking for something nonalcoholic, they can deliver that,” Wood said. “It’s a ‘me too’ thing to have that line extension. But it’s definitely not a main focus for them. It is for us.”

Wood said his four decades in beer gave him insight into the cycles of the industry and how to tackle changing trends. While he believes Bero has runway to innovate, the company sees itself as just a nonalcoholic beer and brewing maker — at least for now.

“The consumer market demands innovation and choices,” Wood said. “You can be conscious and deliberate about how you do that, you don’t have to just keep throwing things at the wall in hopes that they stick.”