Juiced again

In 2000, having built the Odwalla juice empire with a box of oranges, a $200 hand juicer, and a value system, only to see those values watered down to make a multi-million dollar deal with Coca-Cola Co. the year after he stepped down as CEO, Greg Steltenpohl got out of the juice game for good.

He soon hit the lecture circuit, hoping to share the lessons he’d learned at Odwalla, and hoping to inspire a new generation of business leaders to succeed where his generation had failed.

When an audience member at one of the lectures asked him for a few minutes of his time to talk about a juice business she wanted to start, Steltenpohl told her, “I’m not interested in sitting on any boards or anything. But okay, let’s have a conversation.”

Then Magatte Wade-Marchand told him her story. She had just returned home to Senegal after four years in France to discover that nearly all of her country’s traditional beverages were gone, replaced by Coca-Cola and Nescafe. She was particularly shocked to find that the national drink, a hibiscus and lemon blend traditionally given to guests as a sign of hospitality, was nowhere to be found.

“I’m a realist,” she told him, “and I know that Africans will not accept a new brand unless it comes from the West. So I want to make our traditional drinks here and make them under a brand that becomes so popular in America that it is eventually embraced by my own people.”

“There was a sort of perverse logic to what she was saying — like reverse colonialism, only get it right the second time or something,” Steltenpohl says, “… I thought, this is a story that will get me out of bed in the morning.”

And so Steltenpohl returned to the juice business to help Wade-Marchand set up Adina World Beat Beverages, a company dedicated to “reviving authentic beverages and improving the livelihood of rural communities,” according to its Web site.

Control of the ‘value chain’
In the early ‘90s, once Odwalla got past local popularity, Steltenpohl and his partners had to invent a new sort of supply chain.

“We were squeezing whole fruit, putting it in a bottle and delivering it fresh,” he said. “There wasn’t a supply chain like it in the commercial world, so we had to reinvent the distribution process and, as a result, we developed what we call ‘complete control over the value chain.’”

But complete control over the value chain was costly and time consuming. In fact, Odwalla sacrificed its marketing budget in favor of this quality control. The company took a gamble that its values were most important, and that its commitment to those values would sell juice.

The gamble paid off, in part due to really good timing. The company happened to catch the organic wave just as its popularity was beginning on the West Coast. By the time the rest of the country caught on, Odwalla already had the systems in place to satisfy increasing demand.

For Adina, the plan has been similar. The story is still the selling point, the organics market is still soaring, and “fair trade” is becoming increasingly popular. The company has the same sort of control over its supply chain through direct agreements with cooperatives in Africa and small farms in California. Most of the co-ops are owned and operated by women. This time, though, instead of focusing on the health benefits of the juice, the company is focused on fair trade and the preservation of traditional customs.

Adina’s goal, Steltenpohl says, is to move socially responsible concepts out of the niche and into the mainstream. For fair trade, it means moving beyond small coffee and cocoa growers “to get people thinking about all products in terms of: Who makes it? Where does it come from? Is it fair? When we make new markets or succeed in old ones, who’s the beneficiary of that success?” Steltenpohl says.

Hand-picked investors
One of the most important lessons Steltenpohl learned from Odwalla has to do with corporate structure. He says he used that knowledge to help formulate a unique funding strategy at Adina.

Rather than go the usual start-up route, hitting up venture funds for capital, Adina has gone upstream to the members and individual owners of venture capital firms and asked them to make investments as individuals. The company has raised in excess of $1 million.

“We have found that raising funds on a more personal level builds networks of people that become equally as passionate as the entrepreneurs,” Steltenpohl recently told an audience of business students at Stanford University.

It stands in stark contrast to the way Steltenpohl described the corporate structure of Odwalla in an essay he penned after stepping down as CEO. “We did everything we could,” he wrote. “We had a huge number of people aligned with a positive vision. But we still weren’t capable of controlling the capital structure of Odwalla. The system itself forces certain outcomes, and I really underestimated that. There was an incompatibility between the founders’ values and the values of the new investors that came in when we went public. No matter how carefully you craft your policies, unless you have safeguards built into the structure of your organization, your company can be taken over and diverted.”

Rolling out the juices
Pooling Wade-Marchand’s knowledge of traditional beverages, Steltenpohl’s network and experience, and the advice of a professional herbalist, Adina has launched four juice blends: Bissap (the traditional Senegalese hibiscus drink), California Kiss (a strawberry hibiscus concoction modeled after traditional Mexican agua fresca drinks), Gin-jah (a Jamaica-inspired blend of pineapple and ginger), and Mojita (a Cuba-inspired blend of lime and mint).

All of the juices are produced in Oregon at an organic processor. Hibiscus is sourced through women-owned co-ops in Senegal, and all other fruits and herbs are sourced from organic farms, with as many products as possible coming from small local farmers. The company, headquartered in San Francisco, hopes to expand its international farm network and introduce a new juice at the end of March 2006. Sangrila, based on the Spanish recipe for sangria, will be hibiscus-based with organic concord grapes, orange juice and choke berry, a highly antioxidant fruit also known as the Brazilian cherry. Adina plans to eventually offer 10-12 juice blends.

Adina is now sold in about 200 retail locations in Northern California (its first market) and Boston (a pilot market), and the juice has attracted Google and Lucas Films as corporate clients. The company is currently working to introduce the juice to several schools and yoga studios in the area, and it aims to spread into Southern California in April 2006. According to the Organic Monitor, a market research firm focused on all things organic, consumer demand for organic beverages is projected to grow by more than 20 percent in 2006, with conventional grocery channels surpassing distribution in local natural foods stores by 2007.

The supply of organic fruit in the United States is not enough to meet growing demand, a scenario that drives the cost of organic juices ever higher. Even so, market share remains low because of the number of competing companies. The successful companies are typically those that differentiate themselves through branding.

Adina is differentiating itself mostly through its story. On the “feel good” side, it’s got Wade-Marchand’s mission to revive the traditions of her homeland. On the business side, it’s got Steltenpohl’s Odwalla success. If success is met in the middle, a hibiscus and lemon drink could refresh Senegal once again.

Editor’s note: Celilo Group Media has worked with Greg Steltenpohl on Interra, an unrelated business venture.