Business

Mati Energy story is fueled by caffeine

Cans of MATI energy drink roll off the production line and are packaged for shipping at the MATI production facility on Wednesday, September 7, 2016 in Clayton, N.C.
Cans of MATI energy drink roll off the production line and are packaged for shipping at the MATI production facility on Wednesday, September 7, 2016 in Clayton, N.C. rwillett@newsobserver.com

When Tatiana Birgisson started brewing 5-gallon jugs of tea in her Duke University dormitory and selling them to local startup businesses several years ago, the employees at those companies kept clamoring for more.

Specifically, more caffeine.

“The office employees said they really liked it but they had to drink eight cups a day to get their energy needs satisfied,” Birgisson said.

So, following the time-honored tradition of giving customers what they want, Birgisson developed a new brew made with all-natural ingredients that packed the caffeine equivalent of one-and-a-half cups of coffee into a 12-ounce serving. And her startup, Mati Tea, became Mati Energy.

Today Mati, which was incorporated in April 2012 and has its headquarters in Durham, sells three flavors of all-natural energy drinks made with tea, fruit juice and guayusa leaves – the second-most caffeinated plant after coffee. Although the company led by Birgisson, now 26, is a small player in a multibillion-dollar industry dominated by Red Bull and Monster, Mati’s growth trajectory has attracted attention.

Consider the following:

▪ Today Mati’s energy drinks are sold in 400 retail outlets in four states – North Carolina, South Carolina, Georgia and Tennessee – up from 140 in January. Retailers selling the drinks include Whole Foods, Handee Hugo convenience stores and, as of mid-August, 25 Kroger stores in North Carolina and Tennessee.

▪ Although Mati doesn’t disclose sales figures, Birgisson will say that monthly sales have risen 220 percent since February, which is when the company hired its first director of sales.

▪ Mati plans to double its flavor lineup in November by launching three new flavors: peach mango, blueberry pomegranate and passion fruit.

“Whenever you get a line extension like that, you get more shelf exposure,” said Joe Lidowski, sales manager at Durham-based Harris Beverages, one of Mati’s distributors. “Consumers see there is a variety and that creates more excitement and more trial samples.”

▪ After experiencing quality control issues and other problems with two contract production facilities, Birgisson decided that the best solution was for the company to have a plant of its own. Mati invested nearly $1 million in a 30,000-square-foot plant on U.S. 70 in Clayton, which opened in March. In addition to upgrading quality, the company projects production costs will be 20 percent lower by the end of the year as it continues to ramp up production.

Mati, which has 18 full-time employees, produced more than 100,000 12-ounce cans in August alone. Given the increased distribution and the upcoming expansion of flavors, “we’re expecting to double that again by December,” said Julia Weidner, product and planning manager.

▪ Mati closed on $2.1 million in new funding Aug. 1, boosting its total capital raised to date to $3.5 million.

Lauren Whitehurst, co-founder of the SoarTriangle program that works with female entrepreneurs, started out as a mentor to Birgisson and ended up investing in the business. She’s high on what Mati has accomplished.

“Is it highly risky still? Sure, it’s a startup,” she said. “(But) the truth is, everything is moving in the right direction for Mati Energy.”

Mati is riding a wave of growth in the energy drink sector. U.S. sales of energy drinks and energy shots rose 10.6 percent to $13.5 billion in 2015, on top of 14 percent growth in 2014, according to market research firm Statista.

Mati drinks typically retail for $2.49 to $2.69 for a 12-ounce tall-and-skinny can, known in the industry as a sleek can, which makes it price-competitive with industry leaders Red Bull and Monster.

Whitehurst says that in addition to competing for Red Bull and Monster customers, Mati’s all-natural ingredients and relatively low calories – 45 calories versus 160 calories for a 12-ounce Red Bull – can appeal to a new breed of consumer. People like her.

“I never had an energy drink before I had a Mati Energy – and I wouldn’t have touched one,” she said.

At the Whole Foods store on Wade Avenue in Raleigh, which only sells all-natural energy drinks and therefore doesn’t stock Red Bull and Monster, Mati is the top seller among its handful of brands, said Chris Best, grocery team leader.

The brand’s selling points, he said, include the fact that it’s a no-sugar-added product, its status as a local company and the taste.

Consumers “love the flavor,” Best said. “I don’t drink it very often but I have team members who drink it religiously. It’s their favorite-tasting energy drink.”

Birgisson also asserts that Mati drinks provide a “better” source of energy. Instead of providing a jolt of energy followed by a trough, Mati drinks give you what she calls “a caffeine arc.”

The reason: the tea leaves that Mati uses are high in theobromine as well as caffeine.

“Theobromine is a stimulant very similar to caffeine, but it has a much longer half-life, so it stays in your system longer than caffeine does,” Birgisson said. “So that creates a more long-lasting energy effect.”

Homework assignment

The Mati story got its start in late 2011 when Birgisson was a Duke student suffering from depression. She resorted to brewing batches of tea to provide the energy she needed to get through the day.

Soon she was sharing her concoction with friends. “I wasn’t charging them anything, so that probably encouraged them to ask for more,” she said.

After moving into a dormitory for entrepreneur-minded students, she discovered to her surprise that residents were required to start a business. She was bereft of inspiration until one of her fellow students told her, “You could start charging people for the tea you’re making and that could be your startup.”

The challenges intrigued her.

“Where was I going to buy tea at a price that I could afford to resell? I had no idea. I had manufacturing issues,” she recalled. “I needed to figure out how to make it in a larger batch size ... I needed to figure out suppliers. I needed to figure out formulations.”

She eventually did figure it out, enabling her to land her first account and begin delivering kegs that she hauled around herself in her two-door Toyota Yaris.

Whitehurst said that although Birgisson possesses “a real intuition and gut feel about how to build a business,” she’s also done a great job of tapping into outside experts and surrounding herself with “a great team of people who know a lot about the functional areas she needs help in.”

“She is definitely not doing this by herself,” Whitehurst added. “She’s doing it with a team.”

Birgisson concurred.

“I think that’s one of the benefits of being a 26-year-old,” Birgisson said. “You know that you don’t know everything and you have to hire people that know more than you. ... It’s about winning and that doesn’t mean that Tatiana has to be the one winning every day. It means that Mati has to be winning every day.”

And there’s no question where the Mati team gets the energy it needs while engaged in the daily battle to boost market share.

David Ranii: 919-829-4877, @dranii

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