Energy Brands, also doing business as
Glacéau, is a privately owned subsidiary of Coca-Cola Company based in
WhitestoneWhitestone is a large residential neighborhood in the northernmost part of the City of New York borough of Queens. Located between the East River to the north and 25th Avenue to the south. Whitestone is surrounded by College Point, Flushing, Bayside, Auburndale, Linden Hill, and Murray Hill...
,
New York CityNew York is the most populous city in the United States, and the center of the New York metropolitan area, which is among the most populous urban areas in the world. A leading global city, New York exerts a powerful influence over worldwide commerce, finance, culture, fashion and entertainment...
that manufactures and distributes various lines of
enhanced waterFlavored water is a category of beverage that is water enhanced with natural flavors, herbs, vitamins, and/or sweeteners and generally lower in calories than non-diet commercial soft drinks...
. Founded in May 1996 by J. Darius Bikoff with an
electrolyteIn chemistry, an electrolyte is any substance containing free ions that behaves as an electrically conductive medium, usually when in a solution...
enhanced line of water called Smartwater, Energy Brands initially distributed its products to health food stores and independent retailers in the New York area. Adding Fruitwater and Vitaminwater to its line in 1998 and 2000, respectively, the company expanded to nationwide distribution in the early 2000s.
By 2002, the Glacéau line of waters were the top selling enhanced water brand in the United States, with the company's Vitaminwater being its best selling product. In 2006, the company earned
US$The United States dollar is the unit of currency of the United States. The U.S. dollar is normally abbreviated as the dollar sign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. It is divided into 100 cents .The U.S...
350 million in revenues. The company then began its global expansion, launching its products in the United Kingdom and Australia in 2008 and France in 2009.
Energy Brands is owned primarily by Bikoff, employees, and small investors. Rap artist Curtis Jackson—known as
50 CentCurtis James Jackson III , better known by his stage name 50 Cent, is an American rapper. He rose to fame with the release of his albums Get Rich or Die Tryin and The Massacre...
—obtained a 10% share of the company as part of an endorsement deal. 30% equity was sold to
LVMHLVMH Moët Hennessy • Louis Vuitton S.A. , usually shortened to LVMH, is a French holding company and one of the world's largest luxury goods conglomerates. It is the parent of around 60 sub-companies that each manage a small number of prestigious brands. These daughter companies are, to a large...
sometime in the 2000s, which in turn sold those shares. The shares eventually were sold to India-based
Tata GroupTata Tea Limited, also known as Tata-Tetley, is the world's second largest manufacturer and distributor of tea . Owned by India's Tata Group, the Tata Tea Limited markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMČA...
in August 2006, which held the shares until May 2007 when Coca-Cola Company purchased the company as an independent subsidiary, leaving its actual operations with its existing management including Bikoff.
History
J. Darius Bikoff, a self-proclaimed health nut born on September 21, 1961, first conceived of the idea of vitamin enhanced water in 1996. According to him, he was feeling "run down" and concerned he was catching a cold, so he took some
Vitamin CVitamin C or L-ascorbic acid is an essential nutrient for humans, in which it functions as a vitamin. Ascorbate is required for a range of essential metabolic reactions in all animals and plants...
and drank some
mineral waterMineral water is water containing minerals or other dissolved substances that alter its taste or give it therapeutic value. Salts, sulfur compounds, and gases are among the substances that can be dissolved in the water. Mineral water can often be effervescent. Mineral water can be prepared or can...
. As he consumed the items, he started thinking about the idea of having them together instead of having to take them separately. He founded Energy Brands in May 1996 using his personal savings and contracting with an
aquiferAn aquifer is an underground layer of water-bearing permeable rock or unconsolidated materials from which groundwater can be usefully extracted using a water well. The study of water flow in aquifers and the characterization of aquifers is called hydrogeology...
in Connecticut for the base water used. The individual products carried the Glacéau name, with the company's first product being Glacéau Smartwater.
Reflecting on the company's early history, Bikoff notes that it was "very tough" as he struggled with founding the company having no actual experience in beverage manufacturing, beyond working in an aluminum
fabricationFabrication may refer to:*Various processes in arts, crafts and manufacturing:**Fabrication **Semiconductor fabrication**Optics fabrication**Stonemasonry* The creation of a falsehood:**Lies**Fiction**Fables...
factory. While launching his company, he was also having to deal with personal struggles including a
divorceDivorce or dissolution of marriage is the final termination of a marriage, canceling the legal duties and responsibilities of marriage and dissolving the bonds of matrimony between two persons...
and having to file for
bankruptcyBankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring...
. He started by personally introducing Smartwater to smaller independent natural food stores around New York, moving to a statewide launch when the product became successful. He used this same basic method, adding in "
mom-and-pop storesA small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States and under 50 employees in the...
", for the launches of Fruitwater and Vitaminwater in 1998 and 2000, respectively. By 2001, the company's drinks were sold in over 4,000 retail stores in the New York area. According to Bikoff, this enabled his products to go unnoticed by the large beverage makers until the product was firmly established when he could then cultivate relationships with various independent distributors opening the way for nationwide distribution.
Birkoff eventually allowed
LVMHLVMH Moët Hennessy • Louis Vuitton S.A. , usually shortened to LVMH, is a French holding company and one of the world's largest luxury goods conglomerates. It is the parent of around 60 sub-companies that each manage a small number of prestigious brands. These daughter companies are, to a large...
to buy a 30% equity share in the company. LVMH later sold the stake to another investor, who in turn sold it again. The shares ended up in the hands of India-based
Tata GroupTata Tea Limited, also known as Tata-Tetley, is the world's second largest manufacturer and distributor of tea . Owned by India's Tata Group, the Tata Tea Limited markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMČA...
in August 2006, which paid
$The United States dollar is the unit of currency of the United States. The U.S. dollar is normally abbreviated as the dollar sign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. It is divided into 100 cents .The U.S...
677 million for the 30% equity, seeking to expand its American business interests. The following year, on May 25, 2007, Birkoff agreed to sell the company to
The Coca-Cola CompanyThe Coca-Cola Company is the world's largest beverage company, largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world and is one of the largest corporations in the United States. The company is best known for its flagship product Coca-Cola,...
for $4.1 billion. $1.2 billion of the sales went to the Tata Group for its 30% minority ownership, which Tata agreed to sell not wishing to be a subsidiary of Coca-Cola. Under the purchase agreement, Energy Brands remains nearly autonomous as a subsidiary of Coca-Cola, with Coca-Cola primarily operating with a hands off method, leaving Birkoff and Energy Brands principal operating officers in charge. In discussing the role of Coca-Cola, Birkoff states: "We run independently, we have our own offices. If Coca-Cola don't call me, I don't call them."
In 2008, Energy Brands began launching its products in the United Kingdom with France following in 2009. The company eventually plans to expand to Australia, Canada, and Mexico.
Legal disputes
On April 5, 2006, Energy Brands filed a lawsuit against
PepsiCoPepsiCo, Incorporated is a Fortune 500, American multinational corporation headquartered in Purchase, NY with interests in manufacturing and marketing a wide variety of carbonated and non-carbonated beverages, as well as salty, sweet and grain-based snacks, and other foods...
in the U.S. District Court in Manhattan alleging that PepsiCo's
SoBeSoBe is a brand of teas, fruit-juice blends and enhanced water beverages. The name SoBe is an abbreviation of South Beach, named after the upscale area located in Miami, Florida. In the past, the SoBe name also has been licensed for gum and chocolate products.-Company history:SoBe began as the...
"Life Water" packages infringed its
trade dressTrade dress is a legal term of art that generally refers to characteristics of the visual appearance of a product or its packaging that signify the source of the product to consumers...
for similar drinks. In the subsequent settlement Pepsi agreed to change its packaging.
On January 14, 2009, the
Center for Science in the Public InterestCenter for Science in the Public Interest is a Washington, D.C.-based non-profit watchdog and consumer advocacy group.-History and funding:...
filed a class-action lawsuit against Energy Brands' parent company in the Northern District of California Court. The suit alleges that the marketing of the drink as a "healthful alternative" to soda is deceptive and in violation of
Food and Drug AdministrationThe Food and Drug Administration is a Government agency of the United States Department of Health and Human Services and is responsible for regulating and supervising the safety of foods, tobacco products, dietary supplements, Medication drugs, vaccines, Biopharmaceutical, blood transfusion,...
guidelines. The consumer group states that "according to CSPI nutritionists, the 13 grams of sugar in each bottle of Vitaminwater do more to promote obesity, diabetes and other health problems than the vitamins in the drinks do to perform the advertised benefits listed on the bottles". Coca-cola dismissed the suit as "ridiculous" and an attempt by the group to increase its readership.
Financials
As a privately owned company, Energy Brands has never been required to release information its sales figures or other financial information. Bikoff himself never stated what percentage of the company he owned before it was sold.
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magazine once reported that he owned only 25% of the company, but in an interview with
The TimesThe Times is a daily national newspaper published in the United Kingdom since 1785 when it was known as The Daily Universal Register....
, he denied this stating: "Did anyone say I had less than 50%? Look, I maintained control of the company and I maintain it today. But I don’t talk about my share as every story becomes one about personal wealth." In 2006, the company was reported to have an annual sales revenue of $350 million.
Before the sale to Coca-Cola, 70% shares of the company were held by company employees and smaller investors, with 30% held by the Tata Group. In October 2004, rap artist Curtis Jackson—known as
50 CentCurtis James Jackson III , better known by his stage name 50 Cent, is an American rapper. He rose to fame with the release of his albums Get Rich or Die Tryin and The Massacre...
—was given a 10 percent share in the company in exchange for his becoming a spokesperson after learning that he was a fan of the beverage. The health conscious Jackson noted that he first learned of the product while at a gym in
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, and stated that "they do such a good job making water taste good." After becoming a shareholder and endorser, Jackson worked the company to create a new grape-flavored "Formula 50" variant of VitaminWater and mentioned the drinks in various songs and interviews. It's unknown how much Jackson made from the purchase of his shares by Coca-cola, with estimates ranging from $50-100 million. Though he no longer has an equity stake in the company, Jackson continues to act as a spokesperson for Vitaminwater, enthusiastically supporting the product including singing about it at the
BET AwardsThe BET Awards were established in 2001 by the Black Entertainment Television network to celebrate African Americans and other minorities in music, acting, sports, and other fields of entertainment over the past year. The awards are presented annually and broadcast live on BET...
and expressing his excitement over the company's continuing to allow his input on products.
Products
Energy Brands' first product was Glacéau Smartwater, vapor-distilled water with added electrolytes, which was released at the company's launch in 1996. Glaceau Fruitwater, adding zero-calorie fruit flavors to the core Smartwater, followed in 1998. In 2000, Vitaminwater was launched, adding vitamins and natural flavors with Smartwater. Designed to "fill the gap" between soft drinks and
waterWater is an ubiquitous chemical substance that is composed of hydrogen and oxygen and is essential for all known forms of life.In typical usage, water refers only to its liquid form or state, but the substance also has a solid state, ice, and a gaseous state, water vapor or steam. Water covers 71%...
for people who knew they should drink more water but weren't, Vitaminwater was targeted primarily at adults. With fewer calories than soda, the company states that the drink both hydrates consumers and provides nutrients they are likely to be missing.
Vitaminenergy—an
energy drinkEnergy drinks are soft drinks advertised as providing energy to improve physical activity of the drinker, as compared to a typical drink. Rather than providing food energy , these drinks are designed to increase a user's mental alertness and physical performance by the addition of caffeine,...
became the company's fourth product.
In 2002, Energy Brands' Glacéau drinks were the top selling brand of enhanced water. Vitaminwater is considered its most successful of the four products. On April 2, 2009, Glacéau Vitaminwater introduced a new line for the weight-conscious market called Vitaminwater10 that has 10 calories per eight-ounce serving.