January 6, 2018

Consumer -focused private equity group Fireman Capital Partners (FCP) announced it has created a partnership with strategic beverage platform Dunn’s River Brands (DRB) to launch a beverage brand-building company.

The partnership also has announced its first transaction – the acquisition of the Sweet Leaf Tea and Tradewinds businesses from Nestlé Waters North America (“Nestlé”) for an undisclosed amount.

FCP, headquartered just outside of Boston, and Dallas, Texas-based DRB targeted Sweet Leaf Tea and Tradewinds as two ‘legacy’ ready-to-drink tea brands with wide-ranging product lines that will serve as anchors for the portfolio, which plans to seek out additional acquisitions of smaller high-growth brands within the next 90 to 120 days, Kevin McClafferty, president and CEO of DRB, told BevNet.

Founded in 1998, Sweet Leaf Tea produces lines of sweet teas, green teas, calorie-free teas, fruit teas, and lemonades. In 2010 the company acquired tea maker Tradewinds, with Nestlé  acquiring both the following year.

“We absolutely believe in the legacy and the quality that Tradewinds and Sweet Leaf bring to the marketplace, so it was very attractive to have the opportunity to get to know these brands better and they fit with the mission and charter of what we hope to accomplish,” added Lee Brody, CMO of DRB.

Commenting on the transaction, Nestlé said that the decision to divest the two brands was a strategic one for the group.

“This transaction is 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,” said Fernando Mercé, president and CEO of Nestlé Waters North America, in a company statement.

A Strong Brew

Maneuvering to have two strong ready-to-drink tea brands as the foundation of their new beverage platform is a bold move by the partnership.

Tea is the second most consumed drink in the world after water. Between 2009 and 2016 the global tea market has seen a compounded annual growth rate (CAGR) of 5.6 percent, according to the report Tea Market: Global Industry Trends, Share, Size, Growth, Opportunity, and Forecast 2017-2022, issued by IMARC Group. This growth has pushed output to reach 5.6 million tons last year, and has generated expectations that production will top 7.2 million tons by 2022.

Furthermore, the average annual growth rate being realized by the ready-to-drink tea category is at 7 percent – far surpassing the soda category for the past five years, according to data from Zenith Global.

“Ready-to-drink tea is the biggest of the emerging soft drinks categories by volume growth,” Richard Hall, chairman of Zenith Global, told World Tea News.  “It is also remarkable for the extraordinary range of choice now being offered.”

“The Sweet Leaf® Tea and Tradewinds® brands represent a terrific foundation for the DRB portfolio as consumer demand for specialty, local and functional beverage products continues to increase,” said Dan Fireman, managing partner with FCP. “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.”

FCP has already seen success with its craft beer platform CANarchy and its juice brand Evolution Fresh. Together, this expertise and track record, combined with DRB’s team of professionals with strong retail and wholesale history, and extensive distribution and supplier relationships makes for a robust partnership.

“The entire DRB team and I are delighted to partner with Fireman Capital Partners. FCP’s successful track record with consumer and beverage products, such as their current craft beer platform CANarchy and legacy juice brand, Evolution Fresh, make them the ideal partner for DRB as we grow the Sweet Leaf® Tea and Tradewinds® brands,” said McClafferty. “With FCP’s support, we are well-positioned to attract world-class beverage brands and support the next generation of beverage companies.”

-Lynda Kiernan