- Beverage startup Nexba has raised $6 million in series A funding, with $1.5 million from crowdfunding alone.
- Nexba has inked a big deal with UK supermarket giant Sainsbury’s and funding will bankroll further expansion.
- The product will not fall foul of the UK’s sugar tax.
Nexba is taking a big punt on the thirst of future consumers, after raising $6 million in series A funding, with $1.5 million from crowdfunding alone.
The success marks the largest non-tech crowdfund in Australia to date, according to a statement from the beverage startup, with the remaining $4.5 million coming from other private investors.
The $6 million follows a deal in February that saw Gaingels, an investment vehicle aimed at LGBTI founders, tip in $150,000 to the $6 million pot.
Few would have missed the recent rise of unsweetened drinks on shop shelves going against the 20th century tide of successful soft drink brands.
Bao Vuong, senior industry analyst at IBISworld, told Business Insider Australia the health drinks market was growing at four per cent over the past five years.
“The rising health question is a huge thing, revenue for the soft drinks industry has declined over the past 5 years because consumers are switching away from soft drinks,” he said.
“As consumers become more aware of [their health] they’re going to be looking more towards it.”
Nexba seems to be doing something right, with revenues across the business up 148 per cent according to a statement, with drinks like probiotic water and kombucha leading the way. Nexba said they were “on track” to doubling gross revenues in FY19.
Nexba co-founder Drew Bilbe said in a statement that the company’s success stems from “staying true” to providing tasty drinks that are sugar-free.
“We were the first to market here in Australia and we continue to innovate with our retail partners to maintain our status as Australia’s leading naturally sugar-free beverage brand,” said Bilbe.
IBISworld’s Vuong said if Nexba continued to perform well there was a chance one of the big players in the drinks market, such as Coca-Cola Amatil or Asahi, might buy it.
“Coca-Cola have shown in the past they’re willing to buy the companies if they think it’s a good opportunity to expand their market,” he said.
“If Nexba continues to expand and they see it as a threat there is a chance they’ll buy it.”
Nexba has eyes on other markets, saying that the $6 million will go to expanding its distribution into the UK market, partnering with Sainsbury’s and rolling out the drinks to the supermarket chain nationwide.
Nexba co-founder Troy Douglas said the UK expansion was about proving the company could scale the business and expand to new markets.
“Our launch into the UK late last year was a huge step forward on our mission to become the fastest growing Naturally Sugar Free brand,” said Douglas. “We forecast continued acceleration in the years to come as we hit other large markets such as the US.”
The UK recently brought in a soft drink levy, taxing producers 24 pence per litre if a drink contains 8 grams of sugar per 100 millilitres, falling to 18 pence per litre if a drink has between 5-8 grams.
Nexba’s sugar-free drinks would not be required to pay this tax, opening a potential competitive advantage.
But while Nexba is clearly banking on a move away from sweet drinks, ABS data continues to show that around one in two adults consume either a sugary or diet drink once per week, with 36.2 per cent consuming sweet drinks and 17.7 per cent consuming diet drinks.
Meanwhile, IBISworld data shows the Australian soft drink and bottled water market is in trouble, down 0.4 per cent respectively between 2014 and 2019, with aggressive discounting and consumers moving away.
Successful crowdfunding campaign aside, it may be some time before consumers ditch the sugar completely.
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