Screw business as usual? RUNA co-founder on clean energy, social innovation, and staying focused
By Elaine Watson contact
13-Aug-2017 - Last updated on 21-Aug-2017 at 15:13 GMT
Tyler Gage: 'Focus is the name of the game...'
Related tags: Tea, Caffeine
It's hard to think of a company where mission and brand are more intertwined than RUNA, which was forged around an ingredient - guayusa - that created a powerful point of difference for an emerging beverage brand, but also generated income for small farmers in Ecuador. But how can other CPG brands get a sprinkle of RUNA's stardust?
Not every brand has a social mission woven into its DNA from the outset, acknowledged RUNA co-founder Tyler Gage, but there are lots of ways to make a difference.
"But you can't just say, here are the trends in corporate social responsibility and we've got to do A, B and C,​"​ said Gage, who was speaking to FoodNavigator-USA following the launch of his new book, Fully Alive: Using the Lessons of the Amazon to Live Your Mission in Business and Life. ​​
"It's about who are you and what do you care about? One of the things I say to big corporations is that you should start by looking internally as opposed to externally for that inspiration and for that point of care, as opposed to pretending to be something you're not, or focusing on something you're not really known for."​​
"So for us the inspiration was guayusa, the Amazonian culture, people and traditions."​
Above all, he said, it's about genuinely making a difference, not just telling stories: "Cause marketing is one thing​, but big companies I admire the most are those that attack this through their purchasing and their supply chain – look at some of the things that Mars and Nestle are doing - because that's where there is the biggest opportunity to make an impact, outside of whatever stories you can tell. ​
"Take Green Mountain Coffee, which you can get at the gas station, but most people don't know that they had some of the most pioneering fair trade sourcing policies in the industry."​
The challenge is not just trying to make the business of farming in the Amazon more sustainable, but to make it more profitable and stable ​
For Gage - who recently moved into the role of chairman at RUNA, leaving Alex Galindez (formerly at BluePrint Juice) to take charge of the day to day operations as CEO – a key focus is working with farmers in Ecuador to find ways to diversify their incomes, as "being dependent on one crop is always a risky endeavor​.
"Alex is really running the show now, so my focus is on storytelling and getting the word out about the mission and the roots and our social innovation model, which is what the book​​ is all about.​
"People still say RUNA, I've heard of you, you guys sell organic tea! Well yes, technically that's correct, but it's about so much more than that...​
"The challenge right now is not just trying to make the business of farming in the Amazon more sustainable, but to make it more profitable and stable, so through the​ [RUNA] foundation​​ we're looking at what other crops can be grown in these permaculture plots where farmers grow the guayasa in the rain forest, so they have more income spread across different crops, whether it's herbs and spices, or fruits or medicinal plants that could go into wholesale markets."​
Brooklyn-based RUNA, which was founded by Tyler Gage and Dan MacCombie in 2009, has built a vertically integrated supply chain for guayusa from farms in Ecuador to shelves in the US and used the leaf as the cornerstone of a range of ready-to-drink bottled beverages, carbonated 'clean energy' drinks in cans, loose leaf teas and tea concentrates. Today they are available nationwide at chains including Whole Foods and Safeway as well as Amazon.
Clean energy​
RUNA doesn't disclose revenues, but has been growing strongly following a 2016 rebrand and is on a "faster trajectory than we've been on in the past," ​said Gage, who co-founded the company in 2009 with Dan MacCombie.
"We've been growing a handful of million dollars per year in top line in the last couple of years and been making a pretty big shift from glass bottles being the majority of the business, to cans. ​
"The future we see is primarily about clean energy cans… Our proposition of clean energy from a leaf not a lab is where we have a really potent difference. Consumers are increasingly concerned about what's in their energy drinks. Is it just a can of chemicals? So being at a parallel price point to Red Bull with a product with even more caffeine, but it comes naturally from guayusa leaves and tastes great, is a really powerful proposition. ​
"We launched our rebrand ​​last year and we've seen amazing results in terms of same store sales growth."​
Guayusa (gwhy-you-sa) naturally contains caffeine, but it's also got lots of antioxidants including chloragenic acids, isoflavones, and L-theanine. It also has no tannins, which co-founder Tyler Gage claim gives it a clean taste that's "remarkably smooth and slightly sweet."​
Ecuadorian Kichwa people have been boiling guayusa leaves in water to make teas for thousands of years, while hunters call it the 'Night Watchman' because it helps them stay alert.
However, when Tyler Gage and Dan MacCombie started writing their business plan for RUNA (which means 'fully alive' in the Kichwa language) in 2008/9, there was not an established supply chain for producing and marketing the leaf locally, never mind to the US market, say the founders, who launched RUNA with a grant from the Ecuadorian government.
Today RUNA works with 3,000 indigenous farmers in Ecuador, who harvest the leaves and sell them to RUNA, which dries and mills them in a processing facility in Archidona, in the Napo Province of Ecuador. The leaves are first withered (pre-dried) on long troughs to allow the flavor to set in and to reduce the moisture content of the leaf.
They then enter industrial batch dryers to fully dry out before they are, milled, sifted and packed into bags and shipped to the US. They then go through a concentration process so that they can be used in ready-to-drink products.
The magic of guayusa ​
There has been particularly strong growth in the unsweetened energy drink space, where RUNA has advantages over some other brands in that it has products with sugar and​ no high potency sweeteners, he said.
"There's a lot of interest because we're providing a fresh clean taste without any sugar, and no stevia and no aspartame."​
Unlike regular (Camellia sinensis​) tea leaves, "the magic of guayusa is that it doesn't have tannins so you don't get the astringency you get from a normal tea," ​explained Gage. "So from a formulation perspective it's a really beautiful baseline to work with as you get the full flavor of guayusa, the roundness, the earthiness, but you're not having to combat astringency and bitterness. You don't need to add all the sugar or high potency sweeteners."​
The cans are currently in "north of 10,000 stores nationwide​" while the bottles are in broader distribution, primarily because they hit the market first, he said.
"We have quite high ACV in the natural channel and increasingly so in grocery, but we also have a really great foodservice business, as some vendors in the corporate space are kicking out Red Bull and replacing it with Runa. We're still just dabbling in convenience, but will be pushing that a little bit more in 2018."​
After a successful launch in Costco, RUNA has also started selling its beverages in PET bottles via Amazon, he said. "We sell a lot of the cans on Amazon and have great reviews, but the plastic is really picking up now as well."​
Wholesale opportunities​
The wholesale business - supplying guayusa concentrate to other companies such as BluePrint and Mamma Chia – is also growing nicely: "Suja launched a guayusa SKU a few months ago, we're selling to kombucha companies, and we're seeing a lot of the bigger players get interested."​
But don't expect to see the RUNA brand itself expand into a bunch of adjacent categories in the immediate future, he said. "We're in a phase of growth where focus is key, we're refined our flavors and our branding to a point that's really clicking and we're nowhere close to the potential ceiling, so focus is the name of the game."​
Picture: Elodie Delannoy
Unlike many new beverage brands, which struggle to progress due to cash-flow problems, RUNA has attracted not only celebrity backers – from Leonardo DiCaprio, Olivia Wilde, Channing Tatum, Marlon Wayans, and Adam Rodriguez to tennis stars John Isner and Steve Johnson - but high-profile beverage industry investors including ZICO founder Mark Rampolla and the former CEO of Nestle Waters North America Kim Jeffery; along with music industry execs Lukasz Gottwald (aka Dr. Luke), Mike Dean and Coran Capshaw.
So what's it like having Magic Mike on speed dial? Says co-founder Tyler Gage: "Channing​ has been extremely involved and is a really good friend of mine. He was at my wedding last summer, and he's constantly making connections and spreading the word. He's an incredible team player."​
The exit strategy​
So what's the exit strategy? Has Gage been wooed by big CPG suitors, and is he entertaining any offers right now?
"There's been a lot of interest in this business as the space we're in is very hot, and the attraction to the market is very clear, but we're not looking at anything immediately, we're not up for sale," ​he said.
"We have a great next couple of years planned out and a lot of growth in our immediate future, so we're going to keep doing what we do."​
Check out Tyler Gage's new book​​ on Amazon.
Related topics: Markets, Sugar reduction, Clean label, Beverage, Entrepreneurs to watch, Sustainable sourcing, Food retail and e-commerce, People, Fruit, vegetable, nut ingredients, Sweeteners (intense, bulk, polyols), Health and nutritional ingredients
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