Nexba David versus Goliath? we want to be the peoples choice by being real and providing

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Question:

Nexba – “David versus Goliath”?
“we want to be the people’s choice by being real and providing better-for-you
beverage choice”
Nexba was founded in 2011 by Drew Bilbe and Troy Douglas2. The brand is inspired by Drew who was
enjoying a glass of cold iced tea on a beach in Rio Nexpa, Mexico in 20104.
Despite the beverage market being relatively saturated, they identified that the iced tea market
represented 2% of the beverage market in Australia which compared to 12-14% in typical overseas
markets4 and carbonated drinks were in decline due to the trend for healthier beverages4. The
Australian Beverages Council valued the Australian non-alcoholic drinks market, which includes energy
drinks, natural/organic products and iced teas, carbonated drinks etc., at about $8 billion8.
Nexba had a vision to be the “first brand to be natural but sugar-free”1 and ride the sugar-free wave.
Their target markets are where consumer trends towards healthier beverages are taking off,
particularly as awareness around sugary drinks increases among consumers3.
In 2011, they initially set up a canning line that produced 2,000 cans per hour9 in Sydney-suburb
Hornsby and produced 100,000 units5 of naturally sugar-free, iced tea, which they commenced selling
from a combi van door to door1,12. The canning line was bought from Alibaba and shipped in a 40-foot
container. They moved to a contract packager in Victoria as they grew8. Their product is packaged in
slim-line aluminium cans, unlike competitors who used PET, as they felt PET did not meet their criteria
for sustainability9,10.
They distributed to select cafes and the grab and go market whilst working on the school canteen
market8. They secured a deal with school canteen associations in Victoria, “which were low on margin
but high on brand exposure”6 and then Queensland8. They expanded into the petrol and convenience
market in 2012 after securing their first major contract with 7-Eleven in April 20124. They acknowledge
that they didn’t “have deep resources for marketing and advertising, however, what [they did] have
was a strong point of difference and a story that [they were] in a position to share thanks to key
accounts with BP and 7-Eleven”5. Distribution grew to Caltex service stations and IGA supermarkets6.
They custom manufactured a 150mL can for Virgin’s in-flight catering in November 2013 which was
deemed “low-margin, but high-exposure”6. Nexba acquired a 4.8% share of the Petrol and
Convenience market over 3 years and was the fastest growing beverage brand at 36% nationally8.
In 2013, Nexba had “built a strong foundation in the petrol and convenience market, but with more
multinationals coming into the iced tea category” they saw the importance of moving from “x to y
quickly”18. They had built up to having the third-largest market share in the iced tea category in
Australia where Unilever’s Lipton’s Iced Tea was the clear leader, followed by Nestea from Coca-Cola
Amatil18. They felt that having a strong foundation was important as Coles and Woolies “can decide
they don’t want you anymore and wipe a big chunk off your cash flow overnight”18.
This approach was different to the establishment of a new category by coconut water brands18.
Coconut water entered the Australian market at a similar time to Nexba’s launch and the previously
non-existent coconut water category, which was predominantly undifferentiated, launched directly
into Coles and Woolies18,21. This category was made up of Cocobella, Natural Raw C and the newer
entrant H2Coco21.
Nexba Case Study
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However, in Australia 70-80% of grocery spend in Australia is with Coles and Woolworths6, Nexba saw
“getting in there is really the only way to get the critical mass [they] need[ed]”18. In 2014, they signed
a distribution deal with Coles which saw their production increase from 1 million cans to 3 million
cans7. Their Coles launch was driven through a sampling promotion where they sold a 4-pack for half
their regular price, which allowed them positioning in-store at the end of the aisle7. In addition, they
paid for a shelf wobbler that stuck out and highlighted “NEW” with information about the company
and its product range. Selling a 4-pack in Coles meant that the individual cans could not have individual
barcodes17.
They have also built a relationship with Woolworths1 where they launched with unique range of 1-
litre sparkling iced tea in glass bottles in November 20142,9.
Nexba rode the anti-sugar wave with a sugar-free soft drink which gained footing in Coles and IGA
supermarkets, as well as service stations. In October 2015, they also added this product line to 7-
Eleven convenience stores14. On top of their 300,000 cans of iced tea they manufacture a month, they
expect to also have 200,00 cans of their sugar free brew. They also make 210,00 glass bottles of tea
for Woolworths15.
Nexba were in further discussions with Woolworths in early 2017, following their progress with
Coles13. They expect to launch a specifically designed product in this chain of sparkling iced tea in onelitre
bottles15. It is expected the deal with Woolworths will increase their 2017-18 sales beyond $10
million16.
In 2017, they also negotiated with Dominoes Pizza outlets to stock their naturally sugar-free soft
drinks, Nexba Next Gen, exclusively13. Dominoes accounts “for about one million cases of beverages a
year”14.
Their other focus in late 2017 was expanding their availability on University campuses.
Their proprietary sugar-free sweetener has a US patent1. Their product range includes soft drinks, iced
tea, tonic water and flavoured sparkling water, which contain no sugar or artificial flavours3. In the
Australian market they see themselves as a challenger brand3. After their initial product launches, they
added a sugar-free soft drink to their products 13.
The pair perceive themselves as a “crowd sourced brand”9 and believe “ideas can come from
anywhere”9. The cans were designed by Bilbe, however, everyone at Nexba was given the opportunity
to input into the process9. Their products have been named by Facebook fans, a staff member created
the brand logo (Nexba bubble) and a street artist friend created the flavour-inspired illustrations that
wrap around the can9,10. Social media is their main media channel with reach expanded by organic
growth9. Social channels are also used for market research. People “engage with [Nexba] because
we’re the real people involved with the brand. They know we’re not a bunch of content writers. That
takes a lot of manpower, but it’s worth it”9.
The company tapped into the anti-sugar trend due to the ‘groundswell’ that was influenced through
“social media channels such as Twitter and Facebook, which enabled scientific research to be shared
much more widely than in the past”13.
Their branding is visually different to multinational competitors, e.g., Lipton and Nestea, with a fresh,
engaging, youthful persona which appeals to the 15-35-year-old trend-conscious consumers, looking
for healthier drinks10. Nexba is positioned as “a young and fresh brand engaging Australians to lead a
healthier lifestyle with its low-calorie, natural products”11.
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Nexba has always found success with social media campaigns20. With their launch in Coles in 2014
they “partnered with Adelaide band At Sunset to promote Nexba to the band’s million social media
followers”20. Further promotion was gained with a challenge between Nexba and the band to see who
could collect the most selfies in 30 minutes, this led to the local shop having the highest selling units
nationwide20.
Their initial investment from their own money was $500,000 which funded the first few years of
operation before taking out two mortgages1. In early 2012, they received funding for a percentage
equity from an ‘angel investor’5.
They expanded into the UK market in 2018 after securing a spot in Sainsbury’s new future brands
program.
VentureCrowd has valued Nexba at $20 million and they have received $4.5 million from private
investors1 in 2018.

Q2a. Discuss the distribution approach taken by Nexba?
Q2b. Do you think this was the right approach? Why?
Q2c. Should you go big or go small when building your distribution channel? What are the advantages and disadvantages of these different approaches?
Q3b. Do you think this was the right approach? Why?
Q3c. What other pricing approaches could Nexba have used?
Q4a. List the marketing communications Nexba used? Don't forget to think about the role place and pricing promotions play in building awareness, consideration, trial, purchase, re-purchase.
Q4b. Do you think Nexba’s marketing communications was successful? Why? Why not?
Q4c. What other marketing communication approaches could Nexba have used?