[ad_1]
Recess is making big moves in the beverage aisle. The New York-based packaged drink brand just announced a $30 million series B funding round led by Cavu Consumer Partners, a private equity firm with a track record of scaling brands like Once Upon a Farm, Beyond Meat, and Oatly
The deal could set the stage for a major expansion: The last beverage brand Cavu invested in and incubated was Poppi, the Austin-based soda startup that in May sold to Pepsi for $1.95 billion.
Recess also named Kyle Thomas as its new president and co-CEO. Thomas, who was previously the head of emerging brands at Coca-Cola, oversaw the acquisition of Topo Chico and its expansion into hard seltzer. After that, he moved to Nutrabolt, where he increased its sales from $10 million to a projected $1 billion this year, and helped it acquire a controlling stake in greens powder and beverage brand Bloom in September.
Taken together, the moves suggest Recess may be eyeing a Poppi-style blockbuster exit. “We definitely want to have that option,” Recess’s founder and co-CEO Ben Witte tells Inc. “But my view is I want to build a business plan that allows us to control our own destiny.”
To that end, the new round of funding will allow Recess to expand its marketing efforts and increase its retail presence. Cavu partners Brett Thomas and Jared Jacobs also joined Recess’s board.
If you’ve strolled down the beverage aisle at your local grocery or convenience store, you may have noticed that the offerings have become increasingly unhinged: drinks made from seaweed and obscure mushrooms next to cannabis drinks that sit in a legal gray area and an array of beverages loosely known as “functional beverages” that promise everything from better gut health to improved memory. There’s no set definition for the category or its market size, but energy drinks alone are an estimated $25 billion market in the U.S.
With the tagline “calm cool collected,” Recess focuses on the corner of the market Witte calls “relaxation beverages,” and many of its bestsellers include the trending drink additive magnesium and adaptogens the company says can help people unwind.
Witte conceived of Recess in 2016, during the chaotic presidential election between Hillary Clinton and Donald Trump. “The thesis was, we were entering this new period in history driven by technology, and it was going to leave everyone stressed out and anxious,” says Witte. “As a result, people would be looking for healthy ways to relax and reduce stress and chill in a crazy world.”
Recess launched its first products in 2018, canned beverages made with CBD, or cannabidiol, then a trendy ingredient being added to everything from ice cream to body lotion. Like THC, CBD is derived from cannabis plants, but while CBD does not have psychoactive components, it’s sometimes caught between conflicting state and national regulations, similar to other cannabis products.
“I saw the writing on the wall, which was that full regulatory clarity was going to take a lot longer than everyone thought,” says Witte. “We were in this position where we had a product that was clearly resonating with consumers, but we couldn’t scale into the national retailers because they wanted additional regulatory clarity for the ingredient of CBD.”
Realizing the challenging road ahead, he began developing drinks that did not include CBD—a move he insists was not a pivot, but a natural extension of his vision to create “the Red Bull for relaxation.” “I actually quibble with the term ‘pivot,’” says Witte. “To me it was actually an acceleration.”
He never intended for Recess to be tied to a single hero ingredient, he says. In fact, from the start, he saw the brand as carving out a “fundamentally new space of products that all have the overarching proposition of relaxation,” he says. “I took a pretty expansive view of the space that was going to emerge and architected the Recess brand to ultimately be a platform brand.”
In 2021, Recess launched canned drinks called Recess Mood, which are made with magnesium and adaptogens. “That became this incredible bet that not just saved the company, but it also set us on this path to becoming a platform brand,” he says.
Later that year, it introduced powdered electrolyte beverages, and in 2023, Recess rolled out canned mocktails, in what turned out to be another savvy bet on the future of the beverage industry. At the time, zero-proof beers were ascendant, and Witte thought there might be a market for a non-alcoholic counterpart to canned cocktails like High Noon and White Claw.
Today, Recess is available in 15,000 stores nationwide, including Target, Albertsons, and Safeway. Its products also sell well on Amazon, which accounts for half of its sales. Meanwhile, the original CBD drinks that launched the brand now account for less than 5 percent of its sales.
The company declined to share revenue but said that it has doubled revenue every year for the past few years and expects to double its revenue again next year. Witte says its retail velocity—the rate at which products sell in stores—is comparable to that of Poppi. Witte won’t say where the company might venture next, but he has his eye on the supplement space: Think “chill gummies, chill powders.”
Today, Witte calls the early challenges of entering the CBD space “the best thing that ever happened to us” because it forced him to get creative about new product lines. “A lot of people wrote us off for a very long time,” says Witte. “They were like, they raised too much money and they can’t sell anywhere.” Critics suggested it was unrealistic to move into different product categories.
“I think we were able to navigate that situation extremely well in the way I’m very proud of,” he adds. “It was very challenging, but I believed that if I was able to kind of stay in the game and get these new ideas off the ground, that it would ultimately allow us to create something very big and valuable.”
The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.
[ad_2]
Jennifer Conrad
Source link

