Reacquiring ZICO From The Coca-Cola Company: A Q + A With ZICO Founder And PowerPlant Ventures Co-Founder Mark Rampolla

March 6, 2021


Last month, Los Ange­les-based growth-equi­ty investor Pow­er­Plant Ven­tures announced its acqui­si­tion of ZICO coconut water from The Coca-Cola Com­pa­ny (NYSE: KO). Pow­er­Plant Ven­tures co-founder and man­ag­ing direc­tor Mark Ram­pol­la had found­ed ZICO in 2004, sub­se­quent­ly sell­ing the brand to The Coca-Cola com­pa­ny in 2013 for an undis­closed sum. Late in 2019, The Coca-Cola com­pa­ny announced the sun­set­ting of a num­ber of brands, one of which was ZICO. Below, Ram­pol­la shares the jour­ney from WSJ leak of the deac­qui­si­tion news to the sale itself and look­ing for­ward to rebuild­ing ZICO with a keen focus on sus­tain­abil­i­ty.

What was the jour­ney to re-pur­chas­ing ZICO like — did you have a heads up on the sun­set­ting of the brand?

Coke was pret­ty close-to-the-vest before the announce­ment was made, after a leak in the Wall Street Jour­nal. It took about two weeks for them to reach back out and say that they were inter­est­ed in talk­ing to us about a sale. They did plan on sell­ing some of these brands, and that ZICO was among them. They did say there would be an orga­nized process and expect­ed to have mul­ti­ple bid­ders for ZICO and oth­er brands. I told them we want­ed to be part of the process, so we set out as a fund to do our own dili­gence. ell.

What do you think the announce­ment of sun­set­ting this and oth­er ‘hydra­tion’ cat­e­go­ry brands means for Coca Cola and the oth­er big play­ers going for­ward?

Strate­gics are in a chal­leng­ing time, for sure. For many years, they could rely on organ­ic growth from pop­u­la­tion growth. All of the sud­den, in last 10 years, you’ve seen small­er, up-com­ing brands cap­ture mate­r­i­al-enough share that it start­ed to affect them. In response, they’ve tak­en dif­fer­ent approach­es, start­ing ven­ture arms, mak­ing ear­ly-stage invest­ments, start­ing late-stage invest­ments. They haven’t quite fig­ured out how to inte­grate these brands. In Coke’s sit­u­a­tion, they put a lot of effort into this emerg­ing brands group — at the end of the day, some­thing like the eco­nom­ic cri­sis comes along and they want to go back to their core.

I under­stand it, it’s dis­ap­point­ing in many ways, but their loss is our gain. There is still a lot of work to be done in this cat­e­go­ry, and the bev­er­age indus­try as a whole. If this is where they want to focus, then we will have to build this cat­e­go­ry of bet­ter-for-you busi­ness­es on our own.

What does this re-acqui­si­tion mean for the Pow­er­plant Ven­tures Fund?

From a fund-stand­point, our job is to find and invest in what we think are the next-gen­er­a­tion, great brands that we think will help rebuild the food sys­tem. Do we believe in the cat­e­go­ry, believe in the prod­uct, believe in the team, will it cre­ate val­ue for our fund and our investors? ZICO met all of these cri­te­ria.

We took a very hard, tough look at this to make sure that it wasn’t dri­ven by per­son­al emo­tions, to be frank. To that extent, I recused myself from the vot­ing process. This is emo­tion­al — once it sort of ticked off that it makes sense for the fund, that was when I let myself get excit­ed about it. The way I can describe the feel­ing about pur­chas­ing ZICO back from Coke is this: my wife and I have two amaz­ing, won­der­ful teenage daugh­ters. ZICO is sort of like if they had this unruly but high-poten­tial younger broth­er. And first we sent him off to an Ivy league school but then he came back from his edu­ca­tion halfway through because it just wasn’t a great fit. And now we’re going to fig­ure out how to set him back out on his jour­ney. 

We had made nine invest­ments in our fund, this is the 10th. We are wind­ing down this fund — we will like­ly do no more than 12 invest­ments. We’ve been doing well, and it needs to con­tin­ue to per­form well.

How are you struc­tur­ing the new ZICO team?

Tom Hicks is a known quan­ti­ty in the bev­er­age indus­try. I’ve known him for a decade. As soon as this pos­si­bil­i­ty even came to mind, I start­ed to jot down a hand­ful of names and his was on my first list. Tim­ing hap­pened to work, and we start­ed dis­cus­sions imme­di­ate­ly. Tom has worked with Alan George as his CFO for a num­ber of years across a num­ber of com­pa­nies. Tom as CEO and Alan as CFO are the per­fect team — they know the indus­try and have expe­ri­ence with bet­ter-for-you bev­er­ages for many years. Tom also had a brief role at Coca-Cola, where he helped with the ZICO sale to Coke so now it’s all com­ing full-cir­cle.

What’s dif­fer­ent now about tak­ing on ZICO ver­sus start­ing the orga­ni­za­tion from the ground up so many years ago?

Most impor­tant­ly, I don’t have to explain to any­one what coconut water is, and I don’t have to explain what ZICO is. My phone has been ring­ing off the hook with dis­trib­u­tors, con­sumers, retail­ers, brand part­ner­ships. That’s a big dif­fer­ence from 15 years ago when it took us for­ev­er to get calls back from major retail­ers. Now they’re call­ing us. It’s a known cat­e­go­ry. We still think there is plen­ty of room to grow the cat­e­go­ry, but it’s eas­i­er when peo­ple are famil­iar with it. I also think that there’s a much broad­er num­ber of options for what peo­ple would call routes-to-mar­ket. The time I was build­ing and nego­ti­at­ing with Coke in 2009, the con­cept of e‑commerce bare­ly exist­ed, let alone direct-to-con­sumer. Ama­zon was bare­ly car­ry­ing food back then. Now you have many large e‑comm dis­trib­u­tors. Retail­ers have their own dig­i­tal sites as well. There are a lot more ways to work with con­sumers with­out rely­ing on some­thing like a Coke.

What are you most look­ing for­ward to dig­ging into with ZICO in 2021?

One thing that is intrigu­ing about coconut water is that even when we start­ed, there was more sup­ply chain for coconut water than orange juice. Coconut water was a waste prod­uct. We could build an entire indus­try around a prod­uct with a low envi­ron­men­tal foot­print. It’s a min­i­mal­ly dis­rup­tive prod­uct. So now, I’m par­tic­u­lar­ly excit­ed about build­ing out infra­struc­ture sus­tain­ably, focus­ing on bio­log­i­cal cor­ri­dors, bio­di­ver­si­ty and inclu­sion.

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