Is Guayusa the Next Big Thing in Energy Drinks?

Runa seeks to profit from U.S. demand for healthier beverages.

It’s 5:30 a.m., and a group of people—mostly Americans, including a journalist, a photographer, and a videographer—has gathered on the banks of Ecuador’s Achi Yaku River to reenact an ancient purification ritual. In the predawn darkness, a shaman stirs a large metal pot on top of a fire and then ladles the contents into the hollowed-out gourd each participant clutches. The steaming liquid is a caffeine-packed infusion made with leaves from the Amazonian plant guayusa.

Harvesting guayusa leaves.
Harvesting guayusa leaves.
Photographer: Andrew Willis

The group’s purpose is as much commercial as spiritual. Cameras are rolling, capturing footage that may later feature in marketing videos for Runa, a small Brooklyn-based beverage company that sells tea and energy drinks. The eight-year-old business is backed by actors Channing Tatum, Leonardo DiCaprio, and Olivia Wilde, along with beverage industry veterans such as Vita Coco co-founder Mike Kirban and Neil Kimberley, who logged time at Snapple and Schweppes. Runa expects to reach $10 million in sales this year, up from $6 million in 2015.

Tyler Gage, Runa’s co-founder and chief executive officer, tried guayusa 11 years ago, during a summer break from Brown University spent assisting an ethnobotanist doing research in the Costa Rican jungle. Gage says he was instantly hooked on the plant’s jitter-free energy kick. “I’ve always been very caffeine-sensitive,” he says. “Red Bull and coffee make me pretty batty, but I drank the guayusa and felt this particular kind of focus and alertness.”

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Source: Runa

Back at Brown, Gage and classmate Dan MacCombie drafted a business plan as part of a course on entrepreneurship. Armed with prize money from a couple of startup competitions, the two moved to Ecuador after graduation to start building a supply chain. The initial reaction from growers, who cultivate the plant in forest gardens called chacras, mostly for their own use, was one of disbelief. “When we first showed up and said, ‘Hey, we want to buy the guayusa leaves for cash and put them in drinks in New York City,’ they would just give us these blank stares and then laugh hysterically,” Gage recalls.

Eight years on, Runa’s line of energy drinks and dry and bottled teas is on the shelves at Whole Foods Market and Safeway and in the corporate cafeterias of Google and Amazon.com. Runa also sells guayusa wholesale to other companies, including Juice Press, Purity Organic, and Stash Tea. “We’re on a pretty good tear and trying to keep up momentum,” says Gage, who’s betting that Runa’s list of just five ingredients will appeal to those looking for a more natural alternative to caffeine-loaded beverages like Red Bull and Monster, which list more than a dozen ingredients on their labels.

Runa sits at the intersection of two growth trends. The U.S. energy drinks market grew 147 percent in the past decade, to $13.8 billion in 2015, while ready-to-drink tea sales grew 111 percent, to $11 billion, over the same period, according to data from Euromonitor International. In both categories, consumers have been gravitating toward more premium products that are positioned as healthier, says Duane Stanford, editor of Beverage Digest. There’s no shortage of companies mining this vein, including startups such as Vita Coco and Bai, which was recently acquired by Dr Pepper Snapple Group for $1.7 billion. “There seems to be plenty of money to try to build these drinks and to try to push these ideas, but there’s only so much shelf space and only so much distribution resource,” Stanford says.

Runa’s first major investor was the Ecuadorean government, which put in $500,000. “We now employ over 30 people full-time in Ecuador and generate income for over 3,000 indigenous farming families,” says Gage.

Tatum was already a fan when one of Gage’s mentors brokered an introduction. “Getting to meet the farmers in Ecuador and see the impact in their lives put me over the edge,” the actor said in an e-mail, referring to a trip the staff at Runa helped arrange last year. “I love the products and am quite addicted to them.” Tatum declined to say how much he’s invested.

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“The guayusa sales have helped the financial situation of my family,” says Ruth Grefa, who tends 400 guayusa plants on a small farm in Napo province where she also grows bananas, pineapples, yucca, limes, and cacao. Still, she noted that the 35¢ per pound Runa pays for guayusa leaves is lower than what other crops fetch.

Relations with growers may become strained as the company expands, if locals feel they’re not sharing in Runa’s success, says Michael Uzendoski, a U.S. anthropologist who’s married to a woman from one of the area’s indigenous groups. Runa may be a startup, but because it’s American and it peddles an expensive product (a 12-ounce can of its energy drink is priced at $2.89 on Jet.com), many locals regard it as a big, profitable company. “People here see Runa’s name in big lights and assume someone’s making a lot of money,” Uzendoski says.

Gage, though, talks about Runa finding its feet. “We’re not in that many doors overall,” he says, using retail lingo for number of stores. “There’s just so much room to grow that there aren’t any ceilings on what we can do for a very long time.”

The bottom line: Runa, a Brooklyn-based startup, is seeking to capitalize on blistering growth in the energy drink and ready-to-drink tea markets.

 

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