A Thirst for Change

Tuesday, November 27th, 2007

A few years ago, Kara and Theo Goldin quit their jobs — she was a VP at AOL, and he was an IP lawyer at Netscape — to renovate their house and raise their young children. Then they realized they had A Thirst for Change:

In May, 2005, the Goldins launched Hint, a naturally flavored bottled water made without sweeteners or preservatives. Kara is the chief executive; Theo the chief operating officer. This year they expect revenues of $3 million to $4 million, and next year three times as much. The water is sold in several grocery chains, including Whole Foods Market, Stop & Shop, and Ralphs, as well as small stores. And, because Cherise McVicar, Walt Disney’s senior vice-president for national promotions, happened to try (and like) a sample of Hint, the Goldins now have an arrangement to put Disney’ characters on their bottles.

For the Goldins, the years between leaving their familiar world and entering unknown terrain were filled with questioning, sussing out possibilities, then a moment of recognition followed by months of experimenting, gathering info, listening, cold-calling, and being called naive. Then they just plunged in.
Kara began paying more attention to the concerns of health-conscious mothers. “I was looking for the low-hanging fruit,” she says. Then there it was: the sugared-up juice box. “I always wondered why there wasn’t another option.” There is, of course. It’s called water. But Kara figured kids (and everyone else) wanted a drink with flavor. At spas, she had been served water with fruit in it, and realized there was something to that: “I thought someone should put it in a bottle.”

Kara began testing fruit combinations on her family and friends while trying to squeeze information from any people in the beverage business who would talk to her. They were pretty skeptical that someone without any experience could succeed with the most difficult of drinks to produce and sell: one that was unsweetened and made without preservatives.

When she put together a business plan in 2004, she started to see what the skeptics were getting at. “I had no resources for labels, bottles, bottlers,” she says. “I had only halfway listened to their point about how hard it is to get shelf space [in stores].” The only thing that wasn’t a problem was money: She and Theo financed the company themselves initially. Now, after additional investments from friends and family, they own more than 90%.

Theo began devoting more time to Hint about six months before the May, 2005, launch — in two stores, one in Marin County, Calif., and the other in Manhattan. They hadn’t signed up any distributors yet, so they drove the first delivery to the local gourmet market (one case of each flavor — apple, cucumber, lime, and tangerine).

A few months later, they got their first big break. At the Fancy Food Show in New York, the San Francisco buyer for Whole Foods expressed interest in carrying Hint. He asked if the Goldins were with United Natural Foods (UNFI ). They had no idea what that was. Turns out it is the largest natural food distributor in the U.S. With the promise of Whole Foods as a customer, they worked out an agreement.

Getting distributors is what it’s all about in the beverage business. And for those who work on other things besides health foods, an unsweetened drink retailing for $1.69-$3.00 is a hard sell. The Goldins did, though, just manage to get in with an important network of independent distributors. “They have surprised a lot of people,” says Gerry Khermouch, the editor of Beverage Business Insights. “They’re selling overpriced, unsweetened water with a slight hint of fruit. They’re the niche of the niche.”

Now the Goldins have begun to grapple with some of the compromises they made early on. They’ve improved the production process so that Hint has a shelf life of 12 months instead of four. They’ve changed their 16-ounce bottle, which was originally an inch shorter than others on the shelves and looked puny by comparison. Their new one is a standard eight inches tall.

They’ve also figured out a few things about the flavors. Apple and pear are too difficult to work with, so they’re on hiatus. To develop mango grapefruit took 15 tries with three different consultants over an entire year. Peppermint, though, took only two attempts.

Next year they hope to raise $3 million from an investor who might help expand their distribution and sales. “We learned over and over again in the tech world that it’s not really about the idea. It’s about how well and how fast you execute the idea,” says Theo.

It’s not really about the idea. It’s about how well and how fast you execute the idea. I guess that’s why I should have executed this idea a few years back.

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