MEET THE MANUFACTURER

How Nexba is cornering the better-for-you-beverage market

Adam McCleery explains how a trip to Mexico got two young entrepreneurs excited about disrupting the soft drink category and how they plan to take on the big guns in an uber competitive market.

It all started on a sun kissed beach in Mexico in 2010 when Nexba co-founder Drew Bilbe was enjoying a home-made iced tea and taking in his picturesque surroundings.

He was loving the refreshing iced tea, but one thing kept gnawing at Bilbe, and that was its mass sugar content. There had to be a way to replicate the taste without the sugar content, Bilbe thought to himself.

“While I was still over in Mexico, I put my focus onto the iced tea category and what was being done. It was about 12 to 14 per cent of the entire beverage category and I later found out that was consistent with Europe and the rest of North America,” he said.

When Bilbe got back to Australia he had a closer look at the iced tea offerings and discovered it was underrepresented compared to overseas markets.

“It was only about one to two per cent of the beverage market and it seemed like they just weren’t resonating with Australian consumers because they were packed full of sugar, which caused consumers not to recognise them as a better-for-you-beverage,” he said.

“At that time, we didn’t have much else. There were traditional energy drinks, but people understood they weren’t healthy. This concept of better-for-you-beverage space really didn’t exist in Australia.”

Bilbe approached his future brother-in-law and co-founder of Nexba, Troy Douglas.

Bilbe told him about the opportunities he saw in the better-foryou-beverage market and Douglas immediately agreed. The next big hurdle for the pair was setting up shop to manufacture their future product.

“Neither of us had significant money, or came from significant money, but we immediately started researching canning and machinery lines that we would need,” said Bilbe.

“We managed to scrape up enough money to pay for this 2,000 an hour canning line, sight unseen.”

The risk would eventually pay off, but not before the canning line arrived in a 40-foot container with all the instructions written in Cantonese.

“For the next few months, we went about putting it all together, getting experts to help us out with

The brand experienced rapid growth in just 10 years and is now found on many supermarket shelves.

"We wanted Nexba to stand for naturally sugar free. We were the first ones to launch in that category and we’re seeing other brands now do the same thing. We knew that consumers weren’t willing to compromise on taste, so we knew we had to have a blend that was going to very closely emulate the taste, the sweetness and the aftertaste of sugar."

the bits and pieces to get the right certifications and construct the machinery,” said Bilbe.

“The whole time I was working full time and Troy was studying. We were working 24 hours a day, so we relied heavily on calling in favours from family and friends.”

The support from family and friends continued to play an important role in the growth of Nexba. For example, Bilbe’s grandparents helped work the lines and get stock out to market when the company was still in its infancy.

Eventually, the Nexba co-founders worked out the machinery with the help of some experts willing to lend a hand. Finally they could get their first batch of iced tea on the manufacturing line.

“Basically, we got the machine up and running and did our first full production run of iced tea in a can,

Nexba co-founders and co-owners, Drew Bilbe and Troy Douglas, put a focus on creating sugar-free drinks that promoted a healthy diet.

which was naturally sugar-free at the time,” said Bilbe.

“We effectively had 100 pallets in a warehouse in Hornsby, with a Holden Barina, knocking on café doors and trying to sell them, and what we figured out quickly was that the market was eager on better-foryou beverages.”

The early signs gave both men optimism that the demand in the local market would likely extend to the national level.

“We knew right away if we wanted to be successful, we needed to find national range, national exposure and really ramp up our own capability around the manufacturing,” said Bilbe.

However, perhaps one of the most important pieces of Nexba’s continued growth soon followed and changed the game for the company.

“We started the process of developing our own patented IP and natural sweetener blend and we also started cold calling all the major chains around Australia,” said Bilbe.

“Finally, we got our first meeting with 7-Eleven and pitched the story. They loved it, especially because their iced tea was a stagnant category for them at the time and they agreed it needed to be shaken up.”

Nexba was presented to 7-Eleven as a true healthy beverage option, which was an appealing proposition to the company.

“It was in a can as opposed to PET bottles, so it was differentiated from the competition. In that meeting we walked out with a commitment from 7-Eleven to launch in 650 stores nationwide, from our little Hornsby factory which was only doing 2,000 cans an hour,” said Bilbe.

“We very quickly went about trying to boost our manufacturing capability by partnering with a contract packer in Melbourne. They helped us create the ability to manufacture and distribute Nexba Iced Teas to the 650 7-Eleven stores nationwide.”

The results of the 7-Eleven deal were better than the Nexba team could have hoped for and gave the company more ammunition to continue its growth across the market.

“Once we launched in 7-Eleven we took their iced tea category from their most stagnant to the second highest growth category and Nexba was delivering 67 per cent of that growth. A massive turnaround for 7-Eleven,” said Bilbe.

“We were able to take that evidence and continue to shop Nexba around to more retail chains. We got ranging in places like Caltex and Coles Express and had similar success stories in all those chains.”

That move quickly resulted in Nexba being picked up by Coles supermarkets and placed on the soft drink shelves as canned four packs, however, the price point wasn’t where Bilbe wanted to see it.

“We didn’t get the price pack architecture right at the start. We had a four-pack selling for $9 and it was up against a 1.25L competitor for $1.50,” he said.

“We believed in the proposition, but we knew that we didn’t have the price pack architecture right. There were big challenges around the economy of scale too, because we were such a tiny company trying to compete against multi-nationals.”

However, at the same time the Nexba team were working on what they hoped would be an ace-in-thehole, a patented IP sweetener to use in sugar-free soft drinks.

“We finally cracked that formula in about 2015, which was perfect timing for us because we took that Goodsweet Blend and effectively

"It was in a can as opposed to PET bottles, so it was differentiated from the competition. In that meeting we walked out with a commitment from 7-Eleven to launch in 650 stores nationwide, from our little Hornsby factory which was only doing 2,000 cans an hour."

created a whole range of naturally sugar-free soft drinks, which we presented to Coles. Luckily, Coles fell in love with them,” said Bilbe.

“They saw it as having an ability to shake up the soft drink category, which was in decline. They thought Nexba could bring lapsed and new customers back into the soft drink aisle.”

The product was launched to great success, which prompted Nexba to then look at deploying its patented Goodsweet Blend IP.

“We wanted Nexba to stand for naturally sugar free. We were the first ones to launch in that category and we’re seeing other brands now do the same thing. We knew that consumers weren’t willing to compromise on taste, so we knew we had to have a blend that was going to very closely emulate the taste, the sweetness and the aftertaste of sugar,” said Bilbe.

“We spent about six years developing the Goodsweet Blend after about 1,000 iterations.”

Once the blend was perfected and the IP secured, the company made the moves it had been planning over those several years of research and development.

That is one of the biggest advantages that the Nexba team had as a small enterprise at the time: the ability to hand-pick every ingredient, which they still do, and assess everything before it is added to a blend.

“We launched into mixers and tonic waters, sparkling and mineral waters and more recently into the functional space with kombucha and nootropics” said Bilbe.

“Kombucha has set the world on fire, and it really comes down to the taste profile of our kombucha, because of the Goodsweet Blend that we use with our patented IP.”

Being stocked across supermarkets and service stations had a positive impact on the awareness around Nexba’s entry into the market.

“That really allowed us to get mass amounts of brand awareness and national availability. As of about 12 months ago we did a brand awareness study for prompted and unprompted, and we found we are at about 19 per cent brand awareness,” said Bilbe.

“We ran a marketing campaign and after that we found we were at about 29 per cent.”

That huge jump in brand awareness proved to Bilbe and Douglas that the demand was there for the products they were offering.

“Naturally sugar-free food and beverages are exploding at the moment, and I think everyone knows how important exercise and eating healthy is for your health” said Bilbe.

“But the idea of functional health, gut health, cognitive health and all these other things have been a more recent focus, COVID has helped drive that. People are more aware of their immune system requirements, for example.”

This line of thinking is what lead to the most recent development from Nexba, a line of sparkling nootropic functional beverages which only launched in Woolworths in late 2021.

“That product is all about functional benefits of immunity, skin health, gut health, cognitive function and focus,” said Bilbe.

“Instead of a broad-brush approach we have tailored each product to specific benefits that the consumer is looking for, and we’re delivering those functions through active ingredients.”

“We see functional health as a huge growth area, not just in beverages but also in food, and I think the market will start to reflect that.”

Using immunity as an example, Nexba released a product with a high concentration of Vitamin C, approved natural nootropic ingredient Gingko Biloba, probiotics and ginger extract.

Other functional products have nootropics and blends that cater to skin health, gut health and cognitive health, to name a few. Bilbe said having one product focus on one area was a better approach then trying to overdo it with multiple applications.

“The formulation for Immunity is different to what we’ve used for the Glow product, which is more for skin health. It is very different to other nootropic drinks because it is targeted to a particular function,” said Bilbe.

The rapid growth of Nexba wasn’t just an Australian market phenomenon either, the company launched its line in the United Kingdom in 2018 and within just a few short years became the nation’s number one Kombucha brand.

Bilbe said the response to Nexba’s patented Goodsweet Blend had the potential to help the company continue its success with new products in the future.

“We will continue to develop and bring out new products powered by Goodsweet. Whether that is for a snacking product, a baking product; there are opportunities to go outside our drinks area,” said Bilbe.

“The whole reason we have been able to achieve our success is because of our Goodsweet Blend which, and I may be biased here, creates a whole different flavour profile. Consumers don’t come back if they don’t like the taste.”

Nexba is expected to continue its growth in the better-for-you-beverage market and Bilbe said the team are determined to continue to innovate and grow.

“What we want to achieve in terms of naturally sugar-free innovation is we need to focus on building the brand and marketing, on product innovation and partnerships with experts in the manufacturing area. We need to focus on what we are good at.” F

Nexba is also popular overseas, becoming the leading Kombucha brand in England.