Shaka Tea on track to achieving 2020 goals: 'We should be profitable by the end of this year'

11-Jun-2020 - Last updated on 13-Jun-2020 at 05:29 GMT

Photo Credit: Kenna Reed

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At a time when many brands are in survival mode, Shaka Tea -- ready-to-drink iced tea made from the endemic Hawaiian māmaki -- has tapped into new avenues of growth, crediting its lean business strategy and approachable price point.

"We’ve been extraordinarily capital efficient over the past few years," said Shaka Tea co-founder and president, Bella Hughes.

"If we stay on track, we should be profitable by the end of this year."

Since launching four years ago, Shaka Tea has consistently grown roughly 300% year-over-year while expanding to markets outside of Hawaii where the products are produced.

While many premium bottled teas range between $4 and $10 per bottle, said Hughes, Shaka Tea has an SRP of $1.98 to $2.49.

"We've been advised for years to make it more expensive. We’ve always been very firm in our belief that you can have a premium product at a healthy margin, but be an accessible price point," Hughes told FoodNavigator-USA.

"Now what we’ve been able to see during this challenge is that, although a lot of our foodservice accounts have been shut down, in terms of increase in velocity of dollars in spend in grocery stores, our price point really suits this time when everyone is watching their budget."

New round of growth: Hitting 2020 goals

Last week, Shaka Tea raised $2.3m in a growth round led by Mahi Pono, bringing its total funding to $4.1m.

In addition to Mahi Pono, the round includes King’s Hawaiian, Gingerbread Capital, LDR Ventures, Allison Rose Culinary Ventures, Park Bench Capital, and several angel investors.

"I think it’s exciting to have investors in this round that have strong Hawaii ties as well as a number of women investors. I think it’s the perfect mix of investors that really reflect our values as brand of being a strong women led and co-founded brand," said Hughes.

"The money is going to be used to further grow our depth in our current markets. We’re all about increasing our velocity numbers and prominent placing [in chilled areas of the store]."

The company has recently added another 1,000 doors to its distribution including The Fresh Market, GNC, Whole Foods Market SoPac, and Piggly Wiggly.

According to Hughes, the new round of funding will be put towards accelerating the direct to consumer business, which saw a 566% increase in spend since March when the pandemic hit.

To further support its online business, Shaka Tea recently hired a full-time creative and digital marketing manager and will be launching a new website later this month.

"We've been pretty old school, brick and mortar up until this point. But, it became evident that by early April, we didn’t just need a professional-looking updated website, we needed a website that was primed to support customers," said Hughes.

"People are a lot more comfortable than they were last year buying beverages online, and that’s another focus area for us. And shipping has changed. There are a number of better resources out there to ship heavy, liquid beverages across the country."

What is māmaki?

According to Shaka Tea, māmaki is an ancient, adaptogenic superleaf that is only found in the Hawaiian archipelago. Shaka Tea harvests its māmaki from forests and mineral-rich, volcanic soil of Mauna Loa and Kīlauea on Hawai’i Island.

In 2020, Shaka Tea opened up its own processing facility where the company washes, dehydrates, cuts, and ships the leaves to its co-packers "so farmers can focus on being farmers, and we'll take care of that end," said Hughes.

Hughes said that she now receives emails almost every day from Hawaiian farmers looking to grow māmaki on their land.

Lifestyle brand?

As Shaka Tea continues to scale and grow as a brand, Hughes is looking forward to becoming more data-focused and to turn its consumer feedback into actionable data insights for the brand.

"We see a lot of daily ritual with our product. We’re not only iced tea in a bottle, but we also have our line of more functional blends for home brewing," she said.

"In general, our iced, ready-to-drink tea is for a younger, on-the-go audience. In terms of our tea for home brewing, it tends to be more of a gender-specific, older audience."

And while, many have said that Shaka Tea has the potential to be a 'lifestyle brand', the company is striving for more of a mission-based, higher-level impact, said Hughes.

"We aren’t a lifestyle brand - we are a movement brand for the Be the Aloha you wish to see in the world movement, and that’s reflected by everything we strive to do as a humble, emerging tea brand," Hughes said.