New Economic Realities   //   March 26, 2024

Celebrity-funded Super Coffee sought fresh cash last year that would cut its valuation in half

After raising $106 million in 2021 at a more than $500 million valuation, beverage startup Super Coffee has been on a quest to rightsize the business.

According to two sources familiar with the matter, Super Coffee — which counts Jennifer Lopez, Alex Rodriguez, Aaron Rodgers and Patrick Schwarzenegger as investors — was looking to raise a convertible note last year. According to one pitch deck sent around toward the end of last year, which Modern Retail has viewed, Super Coffee was looking to raise a $10 million convertible note with a $250 million cap. That would essentially mean cutting the company’s valuation in half compared to the 2021 round. That same year, according to one source, the company also implemented layoffs.

According to the deck, Super Coffee was projected to do around $45 million in net revenue in 2023, down from $54 million in 2022. The company also discontinued 30 products throughout 2023. As the pitch deck described it, Super Coffee was on a quest to simplify the business. Although the SKU rationalization led to a decrease in sales, it also reduced cash burn. As it was described in the pitch deck, the decrease in sales would be temporary, and Super Coffee would return to growth in 2024 — albeit more profitable growth. One slide described the transformation Super Coffee hoped to go through, stating that the company wanted to go from being “dependent on investors” to “self-funding.”

In an email to Modern Retail, Super Coffee co-founder Jordan DeCicco noted that the pitch deck was “outdated” and that much of the information contained in it was “no longer representative of our business.” He declined to answer a full list of questions, including ones related to the company’s funding and valuation.

But, he said that at a high level, “we have been very focused on a path to profitability which included discontinuing more than 30 SKUs and reducing our cost structure to gain efficiencies and leverage throughout our business.”

The company’s CEO, Tyler Ricks, also noted in an email that Super Coffee had “reduced our losses by over 80% over the last 18 months. We have more work to do, but have line of sight to break even this year.” He added, “Our new strategy and optimized portfolio are in place and our goal is to be the best possible partner to our retailers, distributors and wholesalers… We are focused on smart, healthy, sustainable growth, so we don’t have to take another reset in the future.”

Jordan DeCicco further elaborated in a phone call that “our vision and our goal is to become the best better-for-you coffee platform in the world.” He said that over the past 18 months, the company had been on a quest to “focus the portfolio” on core, profitable products. These include its 12-ounce lattes, its multiserve RTD coffee, and a multiserve coffee creamer. He said that the shift for Super Coffee has been in thinking “how can we focus on [these products] and really become a market leader?” Twelve SKUs now represent over 90% of the company’s sales.

Super Coffee’s pitch is indicative of how the funding environment has shifted for food and beverage startups over the last three years. In 2021, startups raised capital at sky-high valuations that were based solely on growth rates. But, as funding for consumer startups has dried up, more pitch decks are now focusing on profitable growth, with founders telling investors about the steps they are taking to grow their margins, reduce cash burn and simplify their businesses.

Super Coffee — which is registered as Kitu Life, Inc. — was founded in 2015. Jordan DeCicco, then a college student, came up with the idea for a protein-packed sugar-free alternative to Starbucks’ frappuccino. He brought in his brothers Jim and Jake as co-founders.

Super Coffee appeared on Shark Tank in 2018. The company didn’t land a deal, but the show helped introduce Super Coffee to scores of new customers and potential investors. In 2020, it signed a master distribution agreement with AB In Bev. The alcohol conglomerate’s venture arm, ZX Ventures, also took a minority stake in the company. 

Then, in 2021, Super Coffee announced a behemoth of a fundraising round: a $106 million Series C that valued the company at more than $500 million. The round was led by Durable Capital investors, but also boasted other institutional investors like 7-Eleven Inc’s venture arm as well as notable CPG figures like former executives at Boston Beer and Schnucks Markets. 

Some of the products Super Coffee discontinued in 2023 included its coffee grounds, as well as plant-based creamers. But, there are signs that the company is still trying to figure out what the right product and channel mix looks like going forward. Last month, the company announced on its Instagram that it was bringing its K Cups and creamer back to Amazon after a hiatus.

The focus on SKU rationalization also made it challenging for the employees who were tasked with selling the product. One former employee, who asked to remain anonymous, recalled one scenario in which a retailer had agreed to double the amount of Super Coffee SKUs it would carry — an exciting milestone. Then, weeks later, employees were told some of those products would be discontinued at the end of 2023.

The challenge for the Super Coffee team, as the former employee described it, became “trying to finesse how to keep our distributors ordering products that we know will be discontinued months down the road.” The former employee also said that Super Coffee went through multiple rounds of layoffs in 2023. 

Ricks, for his part, said that after he became Super Coffee’s CEO around the end of 2022, he “put in place a detailed stage-gate innovation and testing process to increase the likelihood of success for our new products.”

A big focus now for Super Coffee is growing its energy drink alternative, called XXTRA, which it released last summer. It also recently released a 32-ounce multiserve bottle that is available on Amazon and through local grocery stores.

Now, the company is looking ahead. Recently, Super Coffee disclosed to its Instagram followers that it had tweaked its formula and packaging, with the caption describing it as “the best-looking, best-tasting Super Coffee yet.”

It was an exciting milestone for the company. Some customers, however, voiced more pressing concerns. 

“Why is it so hard to buy your coffee anymore?” one user commented under the announcement. “Amazon rarely has the flavors I want.”