[00:00:10] Ray Latif: Hey, everyone, I'm Ray Latif and you're listening to the Top Podcast for the food and beverage industry, Taste Radio. This is episode 226, which features an interview with veteran beverage innovator CJ Rapp, the creator of energy drink forerunner Jolt Cola and cap activated wellness brand Karma Water. Just a reminder to our listeners, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we'd love it if you could review us on the Apple Podcasts app or your listening platform of choice. C.CJ Rapp knows a thing or two about being ahead of the curve. A beverage industry veteran who launched his first brand in 1985, C.J. has launched several disruptive drink concepts that, while slightly too novel for their time, were predecessors to mainstay categories today. That list includes Jolt Cola, a highly caffeinated soda brand that became a cult hit among coders and third shift workers. While Jolt, along with other inventions like DNA and alcohol-spiked spring water have been discontinued, CJ's latest product, Karma Water, a brand of immune-boosting wellness beverages that feature a patented push cap which keeps flavor and functional ingredients separate from the liquid until the point of consumption, is thriving. Although Karma Water was not the first of its kind, CJ has drawn upon his decades of experience to build a brand that has not only outlasted similar ones, but resonated with consumers and landed a key strategic partner in beverage alcohol giant Constellation Brands. In the following interview, I spoke with CJ about cutting his teeth in the industry, and how lessons learned from his days running Jolt have supported the development of Karma, including the critical importance of distribution partners, why he describes himself as a marketer, and what he believes to be the guiding path for any entrepreneur. Hey folks, it's Ray with Taste Radio. I'm going to call right now with CJ Rapp, the CEO of Karma Culture, the maker of Karma Water. CJ, how are you?
[00:02:11] CJ Rapp: I'm great, Ray, and it's good to be with you again.
[00:02:14] Ray Latif: Indeed it is. So happy to have you on the mics for so many reasons, but one reason that we didn't get into the last time we chatted was about your Long history in upstate New York. You grew up in the area, and I recently learned that you have a passion for the Finger Lakes, which I guess isn't that surprising given that you grew up in upstate New York, but I love the Finger Lakes. It's embarrassing to say that I've only been there a couple times, but when you get out there, it is just, oh man, it's one of the nicest places you'll ever visit.
[00:02:45] CJ Rapp: Well, that's very nice of you to say, and we certainly feel that way, and you're correct. If you're not from this area, all too often folks hear the state New York, and immediately and understandably, they think of New York City, which is certainly a wonderful city in its own right, but the contrast couldn't be bigger. Upstate New York is rural, it's mountainous, it's streams and lakes and vineyards, and so it's a very different life. So we're glad you liked it, and we'd love to have you come back.
[00:03:15] Ray Latif: I will come back and as you mentioned for the vineyards, the vineyards are really beautiful up there. I actually visited, I don't know, I think it was about six or seven wineries when I was out there and the Finger Lakes has become really respected for its wine industry. I know you've been involved in a couple of wine brands over the years. Would you ever be interested in launching or partnering with a winery in the Finger Lakes?
[00:03:36] CJ Rapp: Oh, my goodness. You're correct. I was involved in the wine business. I was a wine negotiant for a period of about six or seven years. It was a Napa-based Cabernet in particular. But no, I think I'm going to leave the wine to the true experts. And putting it bluntly, I'll sell a health and wellness non-alcoholic beverage by day. And as far as my wine experience, I'll just stay on the consumer end of the equation.
[00:04:00] Ray Latif: Fair enough, fair enough. You have a long history in beverages. Your family has been involved in the industry for some time. Talk about how you got involved and how you cut your teeth in this business.
[00:04:15] CJ Rapp: Oh you're quite right. So I'm a second generation beverage marketer I guess is the shortest way I've described it. I was blessed. My father was in the beverage business. He was a seven up in Canada dry bottler dates back to 1949. So shortly after he served in the military. And as a young man growing up, literally in my childhood, I have vivid memories of visiting the then what were bottling factories scattered throughout upstate New York from Buffalo to Albany and from Binghamton, New York up to Watertown. And, you know, as they say, it became a way of life. It was just a fascinating childhood. And I can tell you that in the summers, you know, the parents that subscribe to keep the kids busy because it keeps them out of trouble. I had long summers filled with 10 hour days and working at the soda at the bottling factories.
[00:05:05] Ray Latif: What were some of your jobs there? I can imagine it's got to be amazing. If you've never visited a bottling plant, it really is a beautiful thing to see, just seeing all these bottles being filled, packaged and sent out. But what were some of the jobs you did there? Because I assume you weren't a quote-unquote bottler. You weren't actually in charge of any filling going on.
[00:05:25] CJ Rapp: Yeah. Well, considering I started at the age of 12, that's probably a good decision. So, yeah, the bottling plants certainly have evolved. Of course, technology today is much, you know, it's fascinating where it has come over these years. And today, you're right. These are state-of-the-art plants, bottling or canning at blurring speeds, as I would use the 2200 cans per minute. So, it's hard to even recognize the label on the can as it goes by. But to answer your question, actually, my father made what I think in hindsight was a great decision in that each and every summer after school, I would be placed in a different department. So I remember being in manufacturing. I remember being in quality. I remember certainly being in sales and maintenance. And so I actually didn't realize it at the time, but acquired a pretty broad-based knowledge of how the bottling and beverage industry worked. And so once I graduated college, it felt as though I was at least a five to 10 year veteran in the beverage industry, when of course my career was just beginning.
[00:06:29] Ray Latif: So it sounds like you could have had a lot of different jobs within beverage. Eventually you chose the entrepreneurial route in creating beverages. You have been a beverage entrepreneur for 20 plus years, creating brands as a marketer. What drove your interest in the brand side of things?
[00:06:48] CJ Rapp: You know, that might be the classic example of the grass is greener. So growing up in the bottling side, which is manufacturing based, you know, capital intensity, high labor. I think the bottlers always have a desire to be on the branded side. And I've certainly spent a lot of time with representatives of brands or the brand owners themselves, and they see the beauty of the beverage and the distribution side. So I think what it came down to was my passion ultimately fell on the side of innovation with a little bit of a flair for packaging. And so, again, I'm looking back now over a 42-year career, and that is the secret sauce, at least, of what has propelled my activity was the unique combination of innovation and packaging.
[00:07:36] Ray Latif: You certainly had the innovation and the packaging when it came to your first brand, Jolt Cola. Now, there are some younger listeners right now who probably don't know anything about Jolt Cola, but man, talk about a fun, interesting, innovative brand when it came out. Was that your first idea for a brand? And if so, how was it concepted?
[00:07:57] CJ Rapp: So it was the first, I was 25 years of age when we launched it. How did it come about? It was based on two sideline stories. So certainly in college, there was a lot of our friends during exam time in particular, they would take like caffeine tablets and grind them up and put it in a glass of Coke or Pepsi and then drink it real fast because the caffeine was super bitter and it tasted terrible. But that was kind of where the light bulb came on of why don't we create a stimulating cola similar to the way you would drink coffee. And the other part of that was that at that moment in time, this is the mid-1980s. Oh my God, I'm dating myself. But the mid-80s, and that was the era of negative selling. So there were slogans like never at it, never will, less filling. So it was an era where less was better. And we didn't think that that was by itself the best direction to go. And so we thought the other way that that beverages the beverage industry was built on somewhat of an indulgence element to it. And so that's where we brought those two concepts together of returning back to the era of indulgence and the more practical side of creating a cola with a buzz.
[00:09:11] Karma Water: Guessing your margins? That's risky. Belay Financial gives CPG brands the clarity to scale smarter, faster, stronger. Get your free inventory ebook by texting TASTE to 55123 and start making data work for you. Vibrant Ingredients is the natural ingredient partner powering food and beverage innovation, delivering flavor, function, and protection through a science-backed portfolio. Vibrant delivers purpose-driven solutions that help brands create extraordinary experiences. Discover what's possible with Vibrant today. Visit VibrantIngredients.com.
[00:09:58] Ray Latif: Where did the name Jolt come from?
[00:10:01] CJ Rapp: Sticking your finger in a light socket and getting electrocuted is a jolt. And so we thought it was a good name for a stimulating beverage. And there is a lot to be said for a name. And we were blessed. Again, I don't want to digress. But from our first launch in upstate New York with a now highly regarded retailer called Wegmans, we launched. And that was on a Thursday. And by the following Monday, three business days after we launched, There was an article in what was a newly established national newspaper called USA Today. And there was a big picture of a can of Jolt. And from that moment on, you know, as they say, you just hang on. And so we were off to a very fast start.
[00:10:43] Ray Latif: So a quick tangent here. When I was growing up, my family owned an independent grocery chain, and my dad used to take us to these trade shows all the time. And our favorite trade show as kids was the Tri-State Tobacco and Candy Distributors Convention, more so for the latter than for the former. Actually, totally for the latter, versus the former. And I remember my dad went to the Jolt Cola booth and I think you had to buy a certain number of cases and you get a free Jolt Cola coat, this light cherry red Jolt Cola coat. And he got me one and I've had it for a very long time. I don't know where it is right now, but for a long time that was my most prized possession. It really was.
[00:11:32] CJ Rapp: No, that's terrific. And you brought up an interesting thing and that was, you know, candy and tobacco distributors and Jolt was a cola. And so we were, for that reason alone, we were unable to go through the Coke or Pepsi systems because not that Jolt competed directly with those two wonderful brands, but simply because categorically being a cola was a deal breaker. We had to be creative in how we brought the product to market. And one of the ideas back then was to go through candy and tobacco distributors, which of course is how our paths crossed.
[00:12:06] Ray Latif: Were you at those conventions? Could we have known each other, run into each other way back then?
[00:12:10] CJ Rapp: It's quite possible. And I still love young people. So if I saw you there and you were with your dad, chances are I probably gave you a jolt. As long as your dad gave me the wink that it was okay to do so.
[00:12:21] Ray Latif: Well, that opens up another can of worms, because how many grams of caffeine, milligrams of caffeine did Jolt have?
[00:12:28] CJ Rapp: Unabashedly, 72 milligrams, which was literally twice that of any existing product. So back then, Coke would have, I believe, 34 or 35 milligrams, Pepsi about the same. So double that is 64, 66. And again, Jolt had 72. So we were twice the nearest cola.
[00:12:48] Ray Latif: Well, if you think about the caffeine content in current energy drinks at this point, it sounds like it was pretty tame, even for a brand called Jolt Cola.
[00:12:55] CJ Rapp: Exactly. So again, hindsight being what it is, along came this incredible category called energy drinks. And of course, they have greater amounts of caffeine and some other stimulants and a bunch of ingredients that would certainly be twice the amount of energizing ingredients than was in the original Jolt.
[00:13:16] Ray Latif: You've called it a cola a number of times. I've called it a cola, but how did you market the products? Did you call it a soda? Did you call it an energy drink at any point? And did that make a difference when you were talking to distributors outside the Coke and Pepsi system? And, you know, this leads into another distribution angle for Jolt, which was beer. You used beer distributors. So, I mean, first, how did you market the products? And second, you know, how did you convince the beer distributors to take you on?
[00:13:43] CJ Rapp: Yeah two great questions. So when we did launch when we launched Jolt initially it was a cola for sure. It was Jolt Cola with twice the caffeine. And the only reason you would drink it was for the buzz and to stimulate you know for the stimulating effects. So it was either a refreshing alternative to coffee or it was an energy drink before its time. No doubt over time. And it would be about a span of about 12 to 15 years after we launched Jolt, on came the energy drink category, which again, not to digress, but the gentleman that has played an instrumental role, it goes beyond an instrumental role to creating what today we think of as Red Bull, is an Austrian gentleman who acquired the rights to Red Bull. The Red Bull name and trademark is owned by a pharmaceutical company in Thailand, It's a very different drink in its native land of Thailand. This lifestyle and energetic drink that we've all come to understand as Red Bull is really more the creation of the gentleman out of Austria. Making a long story short, he said in many trade shows that his inspiration came from Jolt. That's why I say that Jolt was a energy drink before its time. And that also explains on how we repositioned Jolt with the modern day market at that time. And we transitioned it from Jolt Cola to Jolt Energy. And coming back to one of my original comments about package you know the importance of packaging at the same time that we position Jolt as an energy drink. We launched first ever aluminum packaging technology called the resealable cap can at that time collaboratively with Rexham, who was a large aluminum can manufacturer, and it was essentially a wide mouth opening on a can. And then finally our graphics look like an alkaline battery. So tie all this in together jolt energy graphics of an alkaline battery. The top of it looked like the post on a battery and it was just a perfect match for that brand at that time. And we tripled sales in. This is a 15 year old brand. And the first year we repositioned it with this innovative packaging and we tripled sales.
[00:15:57] Ray Latif: It's pretty amazing what packaging can do for a brand. And I was reading an old Forbes article that featured you. In one of the quotes that really stood out to me, you said, if there's a lesson to be learned, it's that a good idea by itself is not the single determinant to success. and good ideas are a dime a dozen. So that being said, based on your experience with Jolt and the other brands that you've created, what are some of the most important attributes of a successful brand? And this goes into a second question of, is it really the liquid inside or is it everything else that goes into a beverage that makes it successful?
[00:16:39] CJ Rapp: Ray, that is a great question. It's a loaded question.
[00:16:43] Ray Latif: Very loaded, sorry.
[00:16:45] CJ Rapp: So what are the other variables? I'll actually begin where I should have left off coming back to your earlier question, and that is distribution. So what Jolt did at that time, or what we did at Jolt at that time, is we were the first ever non-alcoholic company to make use of beer distributors as our primary route to market system. Now, that may seem illogical or seemed illogical at the time, but to us, as I explained, Jolt was largely a cola. We couldn't go to the Coke and Pepsi systems, so where did we go? How do we bring a beverage to market? And what ran across our mind at that time was, well, let's look at a beer distributor, because a beer distributor is accustomed to handling beverages, at that time, aluminum cans and glass bottles, same packaging that Jolt was in. meaning aluminum and glass. And we said, why can't a beer distributor sell a non-alcoholic beverage? And so we started it again in our hometown of Rochester, New York, with what was then a company called Wright Wisner. Today, they're still in business. They're the Coors Miller Constellation Brands Distributor, an enormously successful company. But at that time, they were a hungry beer distributor. I think their flagship brand at that time was Stroh's Beer. And so they carried jolts and they sold it very successfully. And that was a very easy business model for us to emulate market after market. And quite literally in a period of about 15 months we went from one distributor to 600 distributors and created a national footprint in that span of time. You know we didn't own that distributor network. Again no different than the current beer industry. These are independent businessmen. These were 600 individuals who uniformly decided to sell jolt for us. But what it did is it opened up a new channel of distribution for beverage entrepreneurs everywhere, both in the alcoholic field and non-alcoholic field, and that opened up the floodgates. And if we didn't create what is today referred to as new age beverages, Jolt was a participating brand, and our route-to-market model certainly helped pave the way for other brands to gain distribution as they achieved early success. So that's the explanation there. We want to redirect the question in terms of what else contributes. And again, I'll just, I'll finish this question by saying, my goodness, the list is long. And if I had to prioritize them, I would say that, you know, what leads to success starts with being your own worst critic. You look for your weaknesses and you don't run from them. You meet them head on in the constant search, never ending search for excellence has to be your guiding path. I would say your board of directors to make sure you go through a thought-provoking exercise weekly, monthly, or as often as possible. And of course, money is always important. You have to have enough money to get you through. That's the broadest base statement you can say, but you can't be put in a position that if you have one hiccup where you fall short of your projection, that you're thrown into a cashflow crunch and you get into whole kinds of trouble with your bank or your suppliers. And so being properly capitalized has an awful lot to do with it. Marketing, as everyone knows, has a lot to do with it. And I'll finish with an old term that still applies, and that's integrity. At every point, whether you're successful or whether you're struggling, anything short of complete and total integrity is going to lead to problems in the long run. So some of these old adages about principles of business and character building, they still apply to modern day brand building.
[00:20:26] Ray Latif: All excellent points and excellent advice, CJ. Thank you. As you mentioned, it was a loaded question. And I ask it because when we last spoke, you'd mentioned that you're a marketer. And I think this is something that a lot of people outside the beverage industry don't necessarily understand, which is that beverage entrepreneurs don't actually make the product in most cases, unless you are perhaps a brewer or a kombucha brewer, for example. But for the most part, in most cases, the beverage entrepreneur never touches the liquid or comes in contact with the ingredients that produce the beverage products.
[00:21:06] CJ Rapp: That's correct.
[00:21:07] Ray Latif: So that being said, you know, is your role so much more about the variables, those things that don't go inside the bottle?
[00:21:19] CJ Rapp: I agree. And I stand by my my reference to the fact that I am a beverage marketer. It's a relatable term and it is a broad term by design, but it speaks directly to your point that most beverage brands, we are brand owners, but as a brand owner, To your point, we outsource the packaging. We don't make bottles or cans. We don't make labels. We don't make caps or closures. We don't conduct the bottling. Specifically, we don't manufacture or process the ingredients inside. building relationships with the many suppliers that have expertise in these fields. And we serve as a party that coordinates all of those necessities that are required in order to bring a product to marketplace today. But first and foremost, your product has to have appeal because of the product. If there is no appeal for the product, then there's no reason for your existence. And then your whole supply chain is a moot point because there's no reason to build something that no one wants. So if you really get down to what launches a product and what is the single determining factor of a brand's degree of success, it falls on the marketing side of the equation. And so again, others that we compete with or others that participate in the beverage industry may look at it differently. And I certainly respect their views, but that's on the non-alcoholic side of the business and in our direct space currently, which is health and wellness. We never lose sight that we are a marketer.
[00:22:54] Ray Latif: You had said that Jolt was ahead of its time in terms of the energy drink category and you've created a bunch of brands. And when I think about those brands that you've created, I feel like a bunch of them have been ahead of their time. Jolt for one, you had another brand called DNA, which was an alcohol spiked spring water, which sounds incredibly appropriate and it could be incredibly successful in today's market. Does it drive you nuts that you were ahead of your time on so many concepts?
[00:23:22] CJ Rapp: Yeah almost to a fault race. So I'm not sure there's no denying it. I mean the track record is what the track record. You know it's all there to see. So we were with Jolt. There's no question we were ahead of the energy drink category. You brought up another one an alcoholic spring water called DNA. And today you look at the very vibrant, exploding category of these sparkling hard sodas and the like. So you have delicious products like Corona Sparkling and their competitors. And that's in a massive category today. And yet we were the first such party to launch that over 20 years ago. So yeah, there's a bit of frustration. I'm going to be honest as a marketer again. You know, maybe there's some of those other variables you were looking at in terms of what leads to success. And I didn't mention timing. And maybe that's because in many respects, my timing hasn't been spot on. But I certainly hope that all has changed with our current product being, you know, the Karma brand that we'll talk about.
[00:24:17] Ray Latif: Indeed, you know, timing is everything. And in the mid-2000s, timing was everything for a small brand called Vitamin Water. And Vitamin Water famously was sold to the Coca-Cola company. for $4.1 billion. And shortly after that sale, we saw a lot of brands try to emulate the success of that brand by creating healthier or better for you alternatives to soda, tea, et cetera, just in essence products that had some sort of functional benefit. And that led to just a slew of new brands coming to market that were again, quote unquote, better for you. When you launched Karma, or when you were concepting on this idea for Karma Water, how much of Vitamin Water's success had an impact on you and your decision to create this line of products?
[00:25:17] CJ Rapp: Vitamin Water had an enormous impact on what has ultimately become the Karma Wellness or Karma Water brand. Let's start with their success. So there's no doubt that was a brilliantly marketed product. I know the original founder and I know a lot of people that were early stage participants in that brand. And looking back even now, that was nothing but a terrific success story. But it also impacted our future with karma from what we perceive to be their shortfalls or their vulnerabilities. And I would, in a very general sense, tell you that it was a product that looked the part of health and wellness, but didn't necessarily, this is my view only, doesn't necessarily deliver on the promise of health and wellness. And it wasn't even deliberate. And so I don't want to get too deep into the technical aspects, but more often than not, popular active ingredients, in this case, vitamins, water-soluble vitamins to be specific, like vitamin C, deteriorate very rapidly when they're in a pre-mixed drink. And the obvious being that they're exposed to the elements, they're exposed to the oxygen that's in the water, oxygen after you open the package, sunlight, and et cetera. So what happens is they made the beverage, say with 200 milligrams of vitamin C, but by the time the consumer enjoyed, actually drank the product, it had deteriorated to the point where it was less than half of the stated claim. And again, I'm saying that this may have happened accidentally, or there was not sufficient awareness by the beverage companies at that time. But this was something that we saw and recognized early and knew that with Karma Water needed to have a solution to that phenomenon.
[00:27:05] Ray Latif: Some of this sounds like a departure of your experience, your past experience in that You're really focusing on innovation and technology more so than sales and marketing. The innovation and technology is what you're selling, but you have to be very specific about it and you have to prove it. I'm assuming you hadn't done any clinical kind of testing with Jolt or any other brands in the past, but it sounds like it's very important for Karma. Is that the case? I mean, have you had to prove out the technology and the innovation in a way that was distinctly different from other brands you've created?
[00:27:40] CJ Rapp: We have, and that's a new development for us. So we forged a relationship with Constellation Brands recently, the wonderful alcoholic beverage maker, and they are an investor in Karma. And that has infused enough capital for us to spend money in intelligent areas. And the very first investment that we pursued post our relationship was engaging with a food science company who conducted a scientific study to absolutely validate that the active ingredients in a karmic cap stabilize the active ingredients and by contrast all of the premixed drinks that we measured were subject to rapid deterioration. So again, said in very simple terms, we better protect the active ingredients, and by better protect, if it says 1,000 milligrams of vitamin C, we deliver 1,000 milligrams of vitamin C. Conversely, we saw that competitors in many fields, vitamin-enhanced, probiotic-enhanced, the emerging CBD category, It was even shocking to us to learn how substantial and how immediate that deterioration exists in pre-mixed drinks. And so now we can fall back on a scientific study by a global food science company that delivers on the field of credibility. And to your point exactly, we can validate the fact that our cap technology is superior when it comes to the topic of stabilizing active ingredients.
[00:29:16] Jolt Cola: Do you want more repeat buyers on Amazon? Well, this free resource in collaboration with Straight Up Growth will help your brand turn first-time buyers into long-term subscribers. Download Winning the Repeat Purchase Game on Amazon now at Taste Radio slash SUG. That's Taste Radio slash S-U-G to start building retention-driven growth for your brand on Amazon. Scaling a beverage brand into major retail comes down to operational readiness. From packaging lead times to co-manufacturing strategy, the details can make or break a launch. In a new ebook in collaboration with Octopi and Asahi Beer USA, industry leaders share what they've learned in helping brands scale. Download it now at Taste Radio slash octopi. Do you need to scale your team faster without compromising on talent? Join Oceans for a live webinar on April 20th and learn how leading companies are hiring top global professionals who are ready to grow with your business. Register for the webinar now at Taste Radio slash oceans. That's Taste Radio slash oceans.
[00:30:27] Ray Latif: The long-term vision is definitely part of the sales pitch when you are trying to land investors, potentially even retailers and maybe even distributors. How do you sell your long-term vision for Karma and how do you sell it to investors and how do you sell it to Constellation?
[00:30:45] CJ Rapp: So there's no question that Karma is a unique blend of two elements. It is a health and wellness brand but it is also as a company we are a company that has the intellectual property of our cap technology as well as the trade secrets associated in our supply chain management. So Karma brand if I'm telling you where does the karma brand go, you know five years now ten years from now We will evolve as the consumer demands change over time So if Omega's become the most sought-after Additive or ingredient in the future there will clearly be an Omega line for karma so we're not a science-based company and we do not have a a crystal ball that tells us what ingredients the consumers will most demand in the future. But we do have cap technology that we're very confident will better protect those active ingredients. So karma is already an established brand in health and wellness, and I think very well positioned to compete in the health and wellness space in the future. And then if I separate our cap side of the business, which we haven't spent much time on, it is in our plans to license our cap technology to products or companies in non-competing categories. And to quickly give you a few examples, they would be in the fields of medical, pharmaceutical, agricultural, chemical, So it may seem strange for a cap that works on a beverage, a health and wellness beverage, to work in the field of agricultural chemical, but you have to go back to the original, original idea. And that is, if there are active ingredients that are unstable, or let me rephrase it in the case of chemical, if there are unstable contents in the makeup of a product, And it is better served by separating them so that you can ship them separately and simultaneously. That is a very big idea and that is global in scope and large in scale. And that is where we've enticed our investors in the future to buy into the big idea and where this can all go.
[00:33:04] Ray Latif: You've also enticed investors by having a sound business strategy. I go back to an article on BevNET from July of 2016, when you had raised $2.25 million. And one of the investors in the round, Stu Stromwasser from Green Circle Capital, had said that CJ's approach to building Karma has been more traditional compared to some of the entrepreneurs we've seen enter the beverage space in the past five to 10 years, who've looked to raise loads of money from venture capital firms as early as possible. We saw that Karma had been extremely capital efficient, already had proof of concept, and that they were on their way to a sustainable business. Well, gee, that sounds like something that a lot of investors are thinking about right now.
[00:33:50] CJ Rapp: both approaches, you're correct. We have seen companies that were undercapitalized and built very gradually and organically. Frankly, that sort of is the jolt story. And you could argue that we should have grown the brand more quickly and more dynamically, and we sort of lost pace as a result. So there's a learning curve with that. Conversely, we have also seen brands that really began with a very good idea, They were fortunate enough to take on a capital, an investor for fairly substantial large sums, anything from $10 million to $25 million. And what they ultimately did is they put that money to use, too much of it and too soon, so that they took, say, 80% of a $20 million capital raise for a dynamic rollout But what they didn't realize at that time, of course, is that they hadn't fully vetted their concept, their packaging, their communication points, their flavor mix. And so again, using just simple phrases, they spent the money too soon without a proven business model. And so what happens at that point is, you know, you start a finger pointing exercise, the money's gone, the success didn't, wasn't there. And so there's plenty of blame to go around. And we really needed to avoid that. And so in the case of Karma Water did it in a more, you know, probably at a more accelerated rate than I did previously with Jolt. But at the same time very conservative you know by comparison to some of the other direct competitors we've had. So we've seen some people that we compete with and health and wellness grow at a faster pace. But we've also seen some of them that spent enormous sums of money and crash and burned and they're no longer even in the beverage market today. So I'm not saying our decision and our approach is right for every brand. Each company has to find their own way of doing it. But for us, it was a controlled growth method. And we're very glad that we applied that approach.
[00:35:50] Ray Latif: I got to think that consumer education has been one of the biggest hurdles for your brand. How did you initially address consumer education and how has that evolved over the years?
[00:36:01] CJ Rapp: Well, I would be candid in telling you that we didn't do a good job of making the consumer aware that the problem existed by problem, meaning that the active ingredients are deteriorating in these pre-mixed drinks. So we didn't elevate the consumer's awareness of this problem. Excuse me. And nor have we done a good job explaining how to use our cap and what the benefits of using our cap do for the consumer. So that again that's a long answer to the fact that we didn't do it. It's not that we didn't do it well. We didn't scream it loudly enough or often enough. So now that we have the relationship with Constellation, we know that the distribution will be there. And we don't take that for granted. My goodness, that's such a critical part of building a brand. And I'd like to think we earned it. And I'm telling you that every day, we want to make sure that we earn that right every single day. But coming back to your question, at this point, Karma is, I think, fine-tuned its messaging. It comes back to the marketing of how do we word it, how do we phrase it, how do we put it into visuals so that people can understand that the active ingredients are deteriorating in their drinks and that karmas does not and therefore karma delivers on its promise. We've been refining that language over the last year. And interestingly, the combination of the new distribution we have with our new messaging, at this point, Karma is on a very strong growth trajectory.
[00:37:37] Ray Latif: Going back to the days of Jolt Cola, are you as excited about the beverage industry and the overall CPG sector as you were with Jolt? I can imagine that there's some fun for a wide-eyed, bushy-tailed young entrepreneur, and it's probably a little different than someone who's, I'm gonna call you a grizzled veteran right now. I hope that doesn't offend you, but a grizzled veteran. Is it as much fun as it was when you first started?
[00:38:03] CJ Rapp: I know this will be strange and it may come again as cliche, but it absolutely does. I love what I do. I love the brand building process. I don't mind the daily scuff ups that come with it because every business has its challenge. If anything, I've grown more confident that you know, not to get thrown off course when a challenge comes before us, because I just know that if we apply the right time and thought to it, that we'll, we'll come through with a solution, but passion. Yes, absolutely. So much so that my friends think I'm, you know, out of my mind. I, again, living in upstate New York, I was the 27 year member of the best golf club, country club in upstate New York. It's called Oak Hill Country Club and it's hosted Ryder Cups, it's hosted nine golf majors, and I tendered my resignation not because I didn't think highly of the club or find my friends or the other members interesting or fun, but strange as it may seem, and I know not everyone will agree with this, but if I was given the to the opportunity to spend five hours building karma or five hours on a golf course, I choose five hours on karma. I get more out of it. I find it interesting. And it's the gift that keeps giving back to me personally.
[00:39:15] Ray Latif: But you know, days on those golf courses, I'm sure they helped you throughout your career. No, I mean, some of the networking that you've done over the years, hasn't it?
[00:39:23] CJ Rapp: Uh, no, I was never one to played a lot of customer golf. I, I, if I, you know, I played golf so infrequently, you know, call it at best, you know, 20 times a summer. It was actually just the opposite. I would play with my longstanding friends and the people that I enjoy time with. And if anything, it was a, it was a mental break away from the beverage business. And by the way, that has its place to up in this part of the world. We have long winters and I love to snow ski. I love the occasional break from business. But you asked about passion, and that passion burns as brightly today as it did as a 25-year-old bright-eyed kid trying to roll out an energy drink brand.
[00:40:02] Ray Latif: You have kids, right, TJ? You have three kids?
[00:40:05] CJ Rapp: Three adult children.
[00:40:06] Ray Latif: Have they ever been interested in the beverage industry? Have they gotten involved in any of your brands?
[00:40:11] CJ Rapp: Oh, yes. So three adult children at this point, all of them have been involved at various stages of our beverage activities. Currently at Karma, two of our three are Working at Karma, my son, Hunter, is in sales and based out of Charlotte, North Carolina. And my daughter, Taylor, is project manager and managing our online and e-commerce side of our business at Karma. And my other daughter, Courtney, lives in Rochester, and today she's a mother of two and not active in the Karma business, but used to manage our consumer relations at Jolt 15 years ago.
[00:40:49] Ray Latif: Well, there you go. Is that something that your dad taught you about, you know, keeping your family not only close in terms of, you know, your personal relationships, but also your business relationships?
[00:41:02] CJ Rapp: It sure makes it interesting, and I enjoy it. It keeps me close to my children. Hey, I've talked a lot about business today, and business is what motivates me. But if we're digressing from business for a second, there is just no doubt that family comes first. It's what gets me up early in the morning. It's what brings the biggest and broadest smiles throughout the course of the day. And when things aren't correct, that's what keeps me up at night is family. more so than any business challenges. You know, family is very, very important to me. Again, when I think of rising in the morning, the first thing that comes to mind for me is family.
[00:41:39] Ray Latif: So can you separate the two though? You know, obviously family is very important and keeping the lights on, so to speak, and feeding your families directly tied to your businesses. So are they constantly intertwined? How do you separate the two if they're not?
[00:41:54] CJ Rapp: You know, that's a great question. They're not separated, but you would be surprised that with the two that I mentioned that we work with every day, that I literally can be on a phone call with them or in a meeting at four o'clock and then we reconvene for dinner in person. The day doesn't come up. At that point, we've made the transition from business to family, and we're talking about things that are other than beverages and other than Karma Water that point in time. So, on occasion, of course, does a question come up, are we ready for that trade show, or did we get a good response to something? Absolutely. So they are, in fact, intertwined. I wish that they were part of this call because we've talked about that often. And there's been a lot of people that have made the observation that our family has found a balance between, you know, work eight to five and family at all other times.
[00:42:45] Ray Latif: But is the balance intentional? Like when you are having dinner and something important at work comes up, OK, you can't avoid it. But is the dinner talk intentionally non-business?
[00:42:58] CJ Rapp: Absolutely. You know, I'm the father of the group and I have to remember that, again, that's the most important aspect. So when we're at the dinner table, which that, again, as a family, you know, as the family grows and time moves on, the precious time, particularly when your children reach the adult age, you really cherish those dinners. And, you know, those are incredibly important and life is important. And so when I'm at the dinner table with our adult children, I absolutely, by design, I take interest in their life and their day, in the case of one of my daughters and their children. So yes, there is a very conscious decision that I make as the father to talk about something other than business.
[00:43:39] Ray Latif: CJ, you know, I've really enjoyed speaking with you. You have the wisdom of someone who's been doing this for a long time, and it feels like the passion of someone who is brand new to the industry, and that is a very powerful combination. Thank you so much for taking the time today. I really appreciate it, and good luck with everything going forward.
[00:44:01] CJ Rapp: Well, thank you, Ray, and I share the same sentiments. You are a professional, and you're a joy to be around, and I wish you and your family all the best.
[00:44:09] Ray Latif: Thank you so much for saying that, and the best to your family as well. Thank you. That brings us to the end of episode 226. Thank you for listening, and thanks to our guest, CJ Rapp. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
