Shark Tank US | Top 3 Products You'll Need This Summer

Summary

The founders of a prickly pear-based beverage company pitch their product on Shark Tank, emphasizing its health benefits, including antioxidants and low calories. They share their personal connection to the product, citing childhood memories of their grandmother making prickly pear juice. Despite concerns about distribution and customer acquisition, they reveal solid sales figures and plans for growth. After some negotiation, Kevin O'Leary offers a deal, leading the founders to secure funding by accepting equity and a royalty clause. Their mission centers on sustainability and changing consumer habits, positioning the product as a unique alternative to coconut water.

Takeaways

• 😀 The product is cactus-based water, with flavors like prickly pear, strawberry hibiscus, and mango ginger, and is marketed as a healthier alternative to traditional drinks.
• 😀 Each can contains 35 calories and 7g of sugar, positioning it as a low-calorie, refreshing option for health-conscious consumers.
• 😀 The founders share a personal story about their connection to the product, having grown up with prickly pear juice made by their grandmother in Lebanon.
• 😀 The company has seen rapid growth since launch, reaching $55,000 in sales last month and forecasting $70,000 in sales this month, with distribution primarily in the Northeast through regional distributors.
• 😀 Distribution is a major challenge in the beverage industry, with the founders acknowledging difficulties in securing shelf space and customer acquisition.
• 😀 The beverage is positioned as a sustainable alternative, as cactus requires less water to grow than many other crops, which is a key selling point.
• 😀 The product's unique selling point is its high antioxidant content, with prickly pear offering more antioxidants than a cup of green tea.
• 😀 The Sharks express skepticism about the difficulties of the beverage market, with one Shark mentioning past losses in similar deals due to distribution problems.
• 😀 One Shark offers $200,000 for 20% equity, while the founders counter with a proposal for a line of credit instead of giving up a significant portion of equity.
• 😀 In the end, the deal is finalized with $200,000 for 5% equity and a royalty structure, with the founders agreeing to the terms despite the Sharks' concerns about the business' future.

Q & A

What is the unique selling point of the cactus water beverage being pitched?

The cactus water beverage is made from prickly pear cactus, which offers a low-calorie, low-sugar drink packed with antioxidants. Unlike coconut water, which is known for its electrolytes, cactus water contains more antioxidants and unique nutrients such as betalains, polyphenols, and taurine.

Why did the entrepreneur decide to create this cactus water beverage?

The entrepreneur was inspired by a childhood memory of drinking prickly pear juice made by his grandmother in Lebanon. He wanted to recreate the experience and share the benefits of cactus water, which he saw as a unique and healthy alternative to coconut water.

What are some of the challenges in the beverage industry mentioned during the pitch?

The main challenges include distribution difficulties, securing shelf space in retail stores, and the high costs associated with shipping products directly to consumers, which makes the business expensive to operate.

What financial results did the entrepreneurs share during the pitch?

The entrepreneurs launched their product in February and reported $55,000 in sales in the previous month, with expectations to reach $70,000 in sales for the current month.

What were the entrepreneurs' production and retail costs for the cactus water beverage?

It costs the entrepreneurs $1 to produce each can, with a plan to reduce the cost to 65 cents. They wholesale the product for $1.67, and it retails for $2.99 in most areas, though in New York it can retail for $3.49.

How does cactus water compare to coconut water in terms of nutritional content?

Cactus water offers a distinct nutritional profile with more antioxidants than coconut water. A single prickly pear contains more antioxidants than a cup of green tea, and it also provides polyphenols, taurine, and vitamin C, unlike coconut water, which primarily provides potassium and electrolytes.

Why did the investors have concerns about the cactus water business?

The investors were concerned about the challenges of distribution, the cash-intensive nature of the business, and the difficulty in acquiring customers. They also expressed that the business may be too early in its development to succeed on a large scale.

What did the entrepreneurs suggest as a potential way to market their product more effectively?

The entrepreneurs recognized that they had not emphasized the sustainability aspect of their product enough. They realized that positioning cactus water as a sustainable alternative to traditional beverages could help differentiate their brand in the market.

What was the final offer made by one of the sharks, and what were the conditions?

Mark offered $200,000 for 20% equity in the business, which the entrepreneurs initially hesitated to accept because of their desire to protect their equity. They later countered with a proposal for a line of credit at 5% equity, which Mark accepted.

Why did the entrepreneurs prefer the 5% equity deal over the 20% equity deal?

The entrepreneurs preferred the 5% equity deal because they wanted to protect their ownership stake while also securing capital for growth. They recognized that they would need to raise more funds to scale the business and feared losing too much equity with the 20% offer.