A million cans a month might have sounded like a staggering amount of Mati one year ago.
But that was before the healthy energy drink’s creator Tatiana Birgisson won Google Demo Day
and the resulting national media attention, before she secured $1.35 million in investment and a deal with Anheuser-Busch distributor Harris Beverages and before she negotiated to open her own 30,000-square-foot production facility.
Come Monday, a batch of Tropical Mati will be brewed, mixed, fermented and carbonated using the same process that’s made the beverage fly off the shelves of Whole Foods stores across the Southeast. But rather than relying on workers at Triangle Brewing Company and another production facility, they’ll be produced by Mati’s own employees just 40 miles southeast of Durham in Clayton, N.C.
The move is perhaps the most significant in the history of the young company, which began in Birgisson's Duke University dorm room in 2012 as a cure for her depression. Birgisson describes the last year as the climb to the top of a hill on a roller coaster. Now, Mati is “plummeting downward at incredible speeds that are exhilarating and scary,” she says, all while anticipating the next ride.
Meanwhile, Birgisson is an up-and-comer in an industry that continues to be a darling of investors. Funding to food and beverage startups grew 60 percent from 2014 to 2015, hitting a record (since Dow Jones VentureSource started tracking in 1992) $603 million.
It's also in an increasingly competitive industry, as the rate of new beverages hitting store shelves since 2010 continues to jump. According to a white paper by beverage incubator leader Debbie Wildrick of MetaBrand, about 1,670 new products launched in just one of those years, representing a 22 percent increase in beverage products over the prior year.
But Mati has an interesting position in the energy drink segment, where more data is showing harmful health effects of traditional brands like Red Bull and Monster Energy. Coca-Cola's 2015 acquisition of Monster has freed up some distribution opportunities for Mati too—it's part of what made the Harris deal a go
Big decisions in 2015
Many of those opportunities and challenges came to a head in 2015, when existing manufacturing relationships either limited Mati's growth (with runs of 3,000 cans at a time) or required huge production runs that made it difficult to be nimble and innovate (200,000 cans at a time). Some of the hardest moments came last summer, when Mati could only fill 60 to 80 percent of orders from Whole Foods due to lack of supply.
Birgisson worried it would cause a snowball effect—if stores sell out, either consumers choose another brand or stores fill the space with another product.
"We'd have to travel to Alabama or Georgia or Tennessee to make sure product gets back on the shelf," says Birgisson. "It's a lot more work than just sending a new shipment when cans are ready. And there's the opportunity cost of a week of lost sales."
Birgisson also feared the manufacturers would hit capacity and limit her production capability, or even worse, tell her they couldn't produce Mati any more.
Meanwhile, after raising investment, she was ready to ramp up sales and marketing. But that couldn't happen without a secure way of increasing supply.
The decision to bring production in-house was settled when Birgisson determined that within a year of opening, she could produce cheaper than outsourcing to a manufacturer. Her investors got on board with using their dollars to lease space, buy equipment and staff a facility that gave Mati complete control over its own destiny.
"It's what we needed to do to continue running the company," Birgisson says. "It gives us so much more control over the product and ensures it's the highest quality for the end consumer."
It wasn't long before Birgisson's decision was confirmed—the larger of the two manufacturers told her in December it hit capacity and couldn't produce Mati in 2016.
In-house Mati production
The building in Clayton became the best choice for Mati production because of its size, cost and readiness. Though Birgisson's team had to scrub and paint walls, erect some new interior walls, change out lighting, install steam and water lines and buy equipment, it could be outfitted and running within months.
To make that aggressive deadline happen, Birgisson and Director of Operations Margarita Bello quickly visited with a half dozen craft brewers to get advice on equipment and introductions to their manufacturers and distributors. Birgisson admits she was surprised at how quickly even custom equipment was made and delivered and permits were in place. The most time was spent getting quotes for the water line installation.
According to Bello, who previously worked in R&D and quality control at the largest food manufacturer in Venezuela, most production facilities take two years to get up and running. Five months was pretty miraculous.
But Bello's gotten used to fast timelines working for Birgisson.
"We work fast and we do everything at the same time," she says.
Bello gave me a tour in advance of this weekend's grand opening. The building is pretty nondescript until you walk inside and begin to see Mati branding on signage and hand-built and painted tables.
In the main production area, there’s a large cooler to store ingredients and tea, which is shipped from Ecuador, as well as freezers for the fruit that’s mixed in each of Mati’s three flavored beverages. In the center of the room is a system of tanks that handle the brewing, temperature dropping, mixing and carbonating processes. The drink is then pumped to another machine that fills, seals and dates each can.
From there, it spends an hour in the custom-built “tunnel pasteurizer,” the newest machine in the process that preserves the flavors and consistency of the beverage while ensuring it doesn’t have to be refrigerated at all times.
After the cans are pasteurized, they're blow dried and then packed by hand in cardboard trays and shrink wrapped.
Quality control is critical to the process. A lab just steps from the setup allows Bello to measure caffeine content, Vitamin C, glucose and fructose levels, acidity, microbiality, pH and Brix for each batch. She'll also work on test batches for new flavors in the lab.
"Our tricks come from here," she says.
Beyond the production area, there's a large space connected to three loading docks that is used to store pre-filled cans and pallets ready to ship. There's also an office set up for calls with the Durham sales and marketing team.
The space seems larger than Mati might need, but Bello assured me it would be fully used once all equipment and materials are in and production ramps up.
The magic number is 9,000
Mati will be able to mix 30 barrels, or 9,000 cans of tea, at a time and then pasteurize those cans to guarantee six to 12 months of shelf life. That process makes it possible for Mati to sell in pretty much any national grocery and convenience store that wants to carry the product. At capacity, the facility can hit that one million number. And with another $200,000 investment, four million cans per month.
But Birgisson doesn’t want to get ahead of herself. That's still years away, she says. For now, the production facility gives her team of seven employees the ability to create the supply to meet existing demand and begin aggressive sales and marketing efforts.
With control over production and pricing, Birgisson can begin to negotiate with distributors in other regions of the country, and offer incentives to their salespeople for bringing on more large grocery and convenience store accounts.
As for marketing, there won't be Super Bowl commercials or other large scale tactics. Instead, look for Mati sampling at 5K events around the country, or Mati-mosas at local bars and restaurants. Improving signage will also be a priority, so customers get more information about the brand in stores.
I ended my tour with Bello with a question about what it's like to work with someone as eager and determined as Birgisson.
Here's how she puts it: "She is an amazing girl. She has an amazing vision of what she wants to do, and I'm just helping her to get there."