Monday, April 06, 2009

Pick-me-up enters a down market

Entrepreneurs launch hangover ‘recovery’ drink aimed at nightclub hoppers with day jobs

By Kira Bindrim

The time: 8 a.m. Friday morning. The culprit: four ill-advised tequila shots the previous evening. The feeling: dehydrated, exhausted, hung over. The cure: a new azure-hued beverage called Code Blue.

Or at least that’s what Michael Sachs, along with brothers Jeff and Steven Frumin, hope their “recovery drink” will be for hardworking, hard-playing urban dwellers.

The fact that the former college buddies have launched Code Blue in the heart of a recession confirms not only their belief in the concept, but also the faith of three beverage industry veterans who are the startup’s angel investors.

Doing promotions in the nightlife industry, Messrs. Sachs and Frumin came up with the idea for Code Blue while commiserating over their hangovers.

Working with food scientist and Gatorade co-developer Sumner Katz, the marketers-turned-entrepreneurs came up with a formula that included standard electrolytes, vitamins and minerals. It had two additional ingredients: “reduced glutathione,” which acts as an antioxidant, and a blend of agave nectar and prickly pear juice, considered to have anti-inflammatory properties.

The Code Blue team knows its target demographic. Mr. Sachs, formerly marketing manager for Bacardi’s Grey Goose Vodka, has more than a decade of experience in the wine-and-spirits industry. On the marketing side, the Frumin brothers co-founded Universal Promotions Inc., a Boston-based event management company, as well as promotions agency UCG Marketing.

The guys sat down with beverage executives from 15 different companies to tout their product and take in feedback. Along the way, they snagged three major backers: Jack Belsito, former chief executive of Snapple; Hank McInerney, former chief executive of Tetley Tea; and David Kanbar, former executive vice president and director of Skyy Spirits.

“I thought, ‘This isn’t a drink that you might have every day, but it’s great for what it is,’” says Mr. Kanbar. “There’s a need in the market for it.”

Indeed, Code Blue, which was three years in the making, plowed through its January launch in the Big Apple and has since rolled out in Boston. The drink is sold in hotels, health clubs and bodegas, and earlier this month became available in all 230 Duane Reade locations in the New York metro area.

There are undoubtedly growing pains ahead. Launching a new product in the crowded beverage marketplace is no small feat, even without a nationwide recession.

“They’ve joined a category, but they’re not leading one or creating a new one,” says Tom Pirko, president of beverage industry consultancy Bevmark. “Whether they succeed will depend more than anything on their ability to get inside the consumer’s head and say, ‘This is different.’ ”

Nor is Code Blue the cheapest thing on the shelf. The drink runs $3.50 per 12-ounce bottle.

Mr. Pirko says the drink might benefit from its niche focus. “If you’ve got a severe headache and you’re having double vision because of last night’s blowout, this has an over-the-counter medical appeal,” he says.

The clear minds behind Code Blue agree. “We’re solving a problem,” says Jeff Frumin.

Copyright 2009 Crain's Communications, Inc. All rights reserved.

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