Steaz: Sparkling Tea Turns To Mainstream Markets

By Sarah Theodore

For some in the beverage marketplace, “organic,” “Fair Trade” and “sustainable” are relatively new buzzwords. But Eric Schnell and Steven Kessler, co-founders of the Healthy Beverage Co., Newtown, Pa., took those ideas to heart long before they launched their flagship Steaz Sparkling Green Tea five years ago.
“I was brought up around the whole natural foods movement in the ‘70s, basically, eating healthy, watching the environment, trying to live a more sustainable life,” Schnell says.
Kessler developed his base in the natural foods industry in the 1990s working in the vitamin and nutraceutical supplement industry, and the two crossed paths when Schnell got into the organic tea business. As they watched the health and wellness market boom, they hatched an idea for a new beverage concept that combined healthful attributes with the mainstream soft drink flavors consumers already loved.
“Soda’s not going to go away, ever,” Schnell says. “It’s flat now, and it’s not growing, but Americans love bubbly, sweet-flavored drinks. That’s not going to change. It’s not that people don’t love the taste of soda, it’s just that people don’t love what’s in the bottle anymore.”
While they began with the concept of an organic soft drink, it was the decision to add a cup of green tea to every bottle that defined Steaz.
“We started watching the trend of green tea take off in America,” Schnell says. “Fortunately, brands like Arizona Green Tea did a great job of introducing its bitter taste profile to the mainstream masses in America, with a bit of a sweetness profile that made it acceptable.”
The company chose a mild green tea from Sri Lanka that it felt blended well with popular soft drink flavors such as Cola, Ginger Ale, Orange, Grape and Root Beer.
“We’re always [going to have] mainstream flavors,” Schnell says. “We don’t make up ‘fru fru’ flavors. All of our flavors are tried-and-true, nostalgic flavors.”
A natural base
In addition to green tea, the Healthy Beverage Co. made USDA Organic and Fair Trade certification part of its company mission. The concept was a natural fit for the natural foods channel, and according to Schnell, the brand has grown an average 80 percent a year during the past five years in that market.
As a carbonated product, Steaz filled a void left by more mainstream brands in the natural foods channel, and customers soon asked the company to fill another unfilled niche — energy drinks. The company introduced Steaz Energy in 2007.
The company tapped a number of industry partners in the development of Steaz Energy. It sourced the product’s acai from Sambazon, San Clemente, Calif., and yerba mate from Guayaki, Sebastopol, Calif. Steaz Energy also contains organic guarana, and of course, green tea.  
“We teamed up with a couple companies we’re friendly with and wanted to be part of our project, and made what we think is Mother Nature’s version of Red Bull,” Schnell says.
“It’s all done naturally, organically and Fair Trade sourced,” he adds.
Just as the energy drink category required some finesse to fit the natural food channel’s requirements, so too did diet soft drinks. The Healthy Beverage Co. chose to forgo the use of alternative sweeteners and instead simply reduce the amount of sugar when it introduced diet products last summer. The diet offerings contain 60 percent less sugar than the regular products, for about 40 calories per serving.
To extend its reach even further, the company rolled out its core line of sparkling green tea products in 12-ounce cans last fall. Cans are more portable and are allowed in venues where glass is not – including schools. The Healthy Beverage Co. recently received exemption from the USDA to be served in schools during lunchtime. Its first school market will be Iowa, where it has been approved for sale in 350 public schools.
Expansion plans
While the natural foods channel has provided the company’s base, it feels 2008 will be a breakout year for other channels, including convenience stores, foodservice and grocery. Schnell says the current lineup — including glass bottles for the natural and gourmet market, and cans and energy drinks for the foodservice and direct store delivery markets — provide the appropriate offering for everyone.
To meet its distribution goals, the company plans to double the size of its sales team early this year, with executives who specialize in DSD and foodservice.
“We always wanted this brand to some day be as available as those mainstream brands, so when a consumer walks down the aisle in 2010 of their local Safeway or Kroger, they have the choice to buy a Coca-Cola, Pepsi-Cola or Steaz Cola,” Schnell says.
Socially conscious priorities
The Healthy Beverage Co. puts social responsibility at the core of its marketing efforts, whether they be events for health-related causes, children’s issues or the environment, says co-founder Eric Schnell. “Everything we do is about aligning ourselves with grassroots marketing events,” he says. “Being organically certified, the environment is huge for us.”
To emphasize its green goals, the company recently purchased an airport shuttle bus, refurbished it into a Steaz-themed sampling vehicle that runs on bio-fuel, and is planning a 200-stop tour in 2008.
The company also received the 2007 Socially Responsible Business Award during the Natural Products Expo East show last fall for its support of sustainable farming practices and Fair Trade certification. As much of its product is based on tea from Sri Lanka, Schnell says the company contributes money each quarter to the Sri Lanka Foundation, which set up a disaster relief fund following the 2004 tsunami.