Backyard Soda Co.

CBD-Infused Sodas

Company Information

Website:

https://www.backyardsodas.com/

Sector:

Non-Alcoholic Beverages, Cannabis

Location:

Evergreen, CO

Backyard Soda Co. sells a line of CBD-infused sodas and flavored syrups.

Historically, the company sold syrups for flavored sparkling water and cocktails.

But after learning about the potential health benefits on CBD, and seeing the skyrocketing interest in it from consumers, the company started looking for ways to incorporate it into its products.

Now its line of CBD-infused sodas are sold in retail stores including Whole Foods. The company is raising capital to increase production capacity and expand distribution.

Cannabidiol, or “CBD” for short, is an active ingredient in cannabis derived from the hemp plant. Recently, this ingredient has been used to address health issues such as anxiety, insomnia, and chronic pain.

In 2018, the U.S. Farm Bill designated hemp as an agricultural crop, making it legal to farm nationwide. This was a breakthrough for the CBD industry.

Within this industry are CBD-infused beverages. According to Zenith Global, a market research firm, U.S. sales of CBD-based drinks reached $86 million in 2018. That figure is projected to reach $1.4 billion by 2023.

To capitalize on this trend, large alcoholic beverage brands like Molson Coors, Anheuser-Busch, and Heineken have invested in cannabis-infused drinks. And on a related note, in August 2018, Constellation Brands made a $4 billion investment in Canopy Growth, a cannabis and hemp consumer products company.

At the same time, non-alcoholic beverage companies such as Coca-Cola, Pepsi, and Starbucks have expressed interest in cannabis-based beverages. According to a report by Cowen, a financial services company, Starbucks could lead the charge, noting “We could envision Starbucks ultimately piloting the ingredient.”

Backyard Soda Co. is targeting this growing interest, and could potentially become an acquisition target for one of these larger beverage brands.

The company’s ready-to-drink flavored sodas are infused with full spectrum hemp extract. More specifically, they’re made from a mixture of sparkling water, 15mg of CBD, and flavored syrups.

Backyard sells three soda flavors: Lavender Lemon; Ginger Lime; and Mango Jalapeno.

Consumers can also purchase the company’s line of syrups for flavoring water and cocktails. In addition to the three flavors mentioned above, the company offers syrups such as Madagascar Vanilla Bean, and True Grenadine Simple Syrup.

Sodas can be purchased from retailers individually or in six-packs. Backyard sells its cans to wholesale distributors for roughly $2.40 per can. And the retail price for a single can is between $4.39 and $4.99.

The syrups sells for $12.99 for a 375ml bottle through Backyard’s website, or $22.99 on Amazon.

Keep in mind, the market for CBD-infused beverages is crowded, with several notable competitors:

• Recess, for example, offers sparkling water infused with hemp extract and has raised $3 million in funding.

• Queen City Hemp, founded in 2015, sells a range of CBD products including seltzers and oils. In January 2019, the company began selling products nationwide.

• And Sweet Reason is a CBD-infused beverage brand whose products are sold in 200 stores in New York. In July 2019, it raised $2.5 million from investors including RiverPark Ventures, Max Ventures, and Subversive Capital.

Backyard began selling its CBD-infused sodas in August 2019, shortly after graduating from the CanopyBoulder accelerator program. The company received a $130,000 investment from CanopyBoulder upon graduating.

Through August 2019, the company has sold more than 1,000 cans of soda and approximately $23,000 worth of syrups.

With funds raised, Backyard will add more flavors to its line of syrups and sodas. The company has 10 to 12 recipes in development, including low-sugar and low-calorie options.

In addition, it will look to add “bag-in-box” packaging, enabling the company to sell its sodas at places with fountain drink options.

From a distribution standpoint, Backyard aims to strengthen its relationships with national and regional retailers. At the same time, it plans to develop new channels with boutique grocery stores, liquor stores, bars/restaurants, and cannabis-focused retailers.

Team Background

Shawn Walker - Director of Business Development

In addition to handling Backyard’s marketing efforts, Shawn oversees distribution agreements, events, and promotions.

He also works as a market manager for Wild Tonic Jon Kombucha, an alcoholic beverage company.

Before that, he worked in sales and marketing for Brew Dr. Kombucha, another alcoholic beverage brand.

Shawn earned a Bachelor’s degree from Indiana University.

Jonathan Schultz - CEO

Jonathan manages all of Backyard’s operations, product management, and sales.

In addition to his current position, he co-founded and continues to serve as an advisor for Trigram Software, a medical management software company.

Prior to that, he founded Phoncert, a live audio streaming platform enabling fans to connect with their favorite music artists.

He was previously Director of Business Development for Embrace, a company selling pet insurance coverage, and was a financial advisor for American Express (NYSE: AXP).

Jonathan earned a Bachelor’s degree from Colgate University and an MBA from Case Western Reserve University.

Co-Investors

CanopyBoulder

A seed-stage business accelerator and venture fund for the cannabis industry.

Raising
$107K
Committed
$41.211K (39%)
Current Valuation
$2.5 million Cap / 20% Discount
Min. Investment
$100
Deal Type
Title III
(For all investors)
Offering Type
Convertible Debt
Finance History
  • $30K
    2019-04-18
    Unknown
Notable Investors
  • CanopyBoulder
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