Written by Nora Ephron, the 1989 romantic comedy film “When Harry Met Sally” follows the title characters, Harry Burns and Sally Albright, through a decade-long debate on whether men and women can just be friends. Against the backdrop of a strictly platonic friendship, peppered with love/hate moments and intense arguments, in the end Harry and Sally stop denying their love for each other — realizing that their relationship means everything.

Although the dynamics between business and romantic relationships are quite different, to L.A. Libations’ Co-Founder and CEO Danny Stepper, relationships are the foundation on which the El Segundo, Calif.-based company is built on.

“Deep relationships are at the core of L.A. Libations, these relationships are both unique to us and very meaningful,” Stepper says. “We have deep relationships with all the beverage strategics, having done deals with The Coca-Cola Co., Keurig Dr Pepper, Anheuser Busch, Pepsi and Blue Triton, but our most cherished relationship is of course with Molson Coors. We helped expand Molson beyond beer into non-alc, and we helped broker a business with The Coca-Cola Co. which has led to things like Topo Chico Hard Seltzer.”

Yet, as a beverage incubator, creator and accelerator, L.A Libations has forged connections beyond those of just beverage brands.

“We also have very special relationships with retailers, which we have cultivated over many years,” Stepper explains. “Our relationships with everyone from Walmart, Costco, Albertsons, 7-Eleven and Erewhon are different, deep and strategic — not transactional.

“We have been very intentional and have worked very hard at this for many decades,” he continues. “Our relationships are not self-serving, they drive value for the retailer and have built an element of trust over the past 15 years.”

Going a step further, Stepper also points to the partnerships formed within the founder community.

“We are founders, we know their plight,” he says. “It’s a hard, very hard road. We invest a lot of time and energy into this community. Some fruits of this labor are partnerships with the likes of Athletic Brewing and Chamberlain Coffee. Founders are the lifeblood of innovation in our industry, and they are also very important to our business and crucial to growth for our retail partners.

“We partner closely with the private equity and venture community,” Stepper continues. “An example of this is our partnership with Juggernaut Capital, which has led to the creation of ZOA Energy with Dwayne ‘The Rock’ Johnson, and Plezi with Mrs. Obama.”

And “it doesn't stop there,” Stepper says, noting the company’s partnerships with not only suppliers, but those of creators.

“We have partnerships with Ball Corp., Wildpack, Niagara and Cognizin, and we encourage all our partners in the industry to work with these great companies,” he explains. “Lastly, we cultivate relationships with creative talent. We have worked on beverage brands with The Rock, Mrs. Obama, Emma Chamberlain, Taylor Sheridan (creator of Yellowstone), Snoop Dogg, Gwyneth Paltrow and many more.

"We are very proud of our creator relationships. Everyone seems to be talking about this space, we are and have been living it for a long time,” Stepper continues.

Tailored for the functional beverage market

As L.A. Libations’ hustle is fueled by its dedication to health, wellness and social responsibility, the company’s on a mission to bring the most innovative, healthy and tasty beverages to the world.

With that in mind, Bonnie Shah, chief marketing officer at L.A. Libations, describes the functional beverage market as evolving.

“Well, first, everything that we do is grounded in health, wellness and sustainability,” she says. “These are not trends, rather the price of admission and the new normal.

“Drilling down beyond that, we look at several components, including overall consumer trends, macro-consumer need states, and specific demographics,” Shah continues. “New brands must focus on shopper specific needs and trends. In many cases, we recommend aligning with the needs of the Gen Z and trailing millennial shoppers.”

Shah also points to functional ingredients as playing an important role in the market.

“We focus on brands with functional hero ingredients, we also love to disrupt big sleepy categories that have players with legacy ingredient problems,” she says. “Adult nutrition is a great example of this. We are setting out to disrupt the two big players that have ingredient problems with our clean ingredient brand Don’t Quit! This is a $6 billion dollar category that is prime for disruption.”

When it comes to building brand awareness, Shah stresses the importance of staying focused on targeted areas, and using all tools in the marketing toolbox.

“When launching new brands, we like to go deep in a certain market, not wide across multiple markets. We start by incubating in a focused region and look to replicate that model as we launch into new markets,” Shah explains. “To start, we infiltrate select neighborhoods to drive awareness and sampling. This brings us the most impact to our marketing dollars.

“When we go deep, we hit all channels to build awareness,” she continues. “We approach them from all angles with the goal of driving traffic and awareness to in-store, at the point of purchase.”

Further, Shah points to sampling and educating neighborhood spots, which means running over-the-top (OTT) ads to targeted zip codes, working with local influencers to visit available outlets, investing in out-of-home (OOH) billboards within targeted areas, and providing some type of in-store sampling experience.

Programs for success

Although marketing is critical to building brand awareness, L.A. Libations stands out in its understanding that marketing is only effective if a product is available on shelf or easily visible to the consumer.

To help emerging brands reach full potential, Shah points to how L.A. Libations’ marketing arm, L.A. Vibrations (LAV), is directly connected to sales and operates to ensure marketing dollars are converting.

“LAV takes a 360 approach to CPG marketing to promote brands from experienced-driven retail, digital, and eCommerce services,” she explains. “From meticulously planned product and geo-targeted retail launches to precision-targeted digital and performance marketing initiatives (think social, influencer, email/SMS, paid ads), to digital operations across direct-to-consumer platforms like Shopify, Amazon and retailer websites — we ensure our brands shine in the direct-to-consumer arena as well as in retail.”

Yet, L.A. Libations’ brand building efforts extend far beyond marketing by offering programs set up for brands to win.

“There is no one doing what we are doing in the industry. …We have become a one stop shop for founders, investors, strategic partners. Our quest for in-house vertical integration is unique to the industry for a small company.”
— Danny Stepper, co-founder and CEO of L.A. Libations

Chad Coester, L.A. Libations’ chief growth officer, points to the company’s Relentless Trade Solutions (RTS) as means for brands to win at point-of-sale.

“RTS helps our brand partners win at the point of purchase (the moment of truth), by providing best in class merchandising at store level,” Coester explains. “RTS does an amazing job by ensuring that items are on the shelf, tagged and in stock.

“Additionally, the RTS ‘Sharks’ (merchandisers) do an amazing job working with stores to find secondary points of interruption for these emerging brands, including incremental displays and cold placement,” he continues. “Cold is Sold! This approach is imperative to influence shopper behavior at the point of decision. Our team, while being very diverse, is cut from the same cloth personality wise. They are in the arena every day, battling, clawing, [and] fighting for every inch for our brands.”

Meanwhile, working in tandem with RTS and LAV is L.A. Libations’ Southern California Incubation Program (SIP), offering emerging brands “proof of concept.”

“The SIP program is the entry point for entrepreneurs and founders to work with L.A. Libations,” Coester says. “It’s where they enter our ecosystem. It’s also where the magic happens, and where brands are built.”

Driven by multiple teams within the company’s business model: the SIP sales team, RTS merchandisers, LAV Marketing and Hi-Touch Libations, an in-house distribution network, the closed-loop incubation program provides feedback directly from consumers and retailers on the brand, packaging and liquid, Coester explains.

“This feedback is critical for tweaking and pivoting your products,” he says. “We can move fast and scale quickly utilizing the L.A. Libations vertically integrated approach. SIP is all about gaining proof of concept. Once proof of concept is attained, we scale.”

This past summer, L.A. Libations also launched a new in-store cooler program dubbed “Taste Tomorrow,” which Coester notes, has been years in the making.

“The cooler program placed 150 ‘Innovation Coolers’ in key Southern California retail stores branded as ‘Taste Tomorrow’ coolers to create a cold destination for shoppers looking for new beverages to meet their needs,” Coester explains. “We can connect with these shoppers both digitally (targeted offers) and directly (introductory pricing and in-store sampling).

“We are excited to see our next wave of products launch in the coolers in early December … Albertsons, Vons, Pavilions have been our first very innovative retail partner on the program,” he continues. “It allows them to be first to market giving them flexibility to be innovative around annual planogram changes.”

Just getting started

As L.A. Libations approaches its 15-year anniversary, the company remains focused on bringing next generation beverages to the forefront of the functional drink market.

“There is no one doing what we are doing in the industry,” Stepper says. “We will continue to create our own brands, which we continue to lean in on and create more of. Our team (90 people now) is, by leaps and bounds, the best it has ever been.

“We have become a one-stop shop for founders, investors, strategic partners,” he continues. “Our quest for in-house vertical integration is unique to the industry for a small company.”

Looking ahead, Stepper also anticipates that the company will continue to be “picky” and partner with the very best founders on their brands.

“I also think we have some very scalable departments in L.A. Libations such as Relentless and L.A. Vibrations that will extend well beyond beverage,” he says. “We have big plans for expanding our distribution footprint geographically. We are playing chess when it comes to distribution. Our investment in Hi-Touch was very noisy in the industry, but I will tell you it only scratches the surface of what our plans are.”

And, given the company’s in-house strategies coupled with its investing capabilities, to Stepper, L.A. Libations is just getting started.

“With the venture capital markets drying up, and private equity being more opportunistic than ever, we have closed the loop with our own capital to deploy now, and I think we are the most strategic investor in beverage based on the capabilities we have,” he explains.

Above all else, is that “our employees thrive, our partners win, and we do some good along the way,” Stepper says. “That will be our ultimate legacy that we want to leave.”