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La Pavia Beverage LLC, maker of Top Note Tonic

Mary Pellettieri, Co-Founder and President

mpellettieri@topnotetonic.com

414-208-9677


COMPANY OVERVIEW

La Pavia Beverage masterfully crafts Top Note Tonics, beverage mixers with a mission to bring flavor, fun and approachabilty back to home cocktails. Formulated in-house by founders with more than 20 years of beverage industry experience, Top Note is the only American beverage mixer brand to win the sofi award for best new mixer from the Specialty Food Association. Top Note is highly regarded in the most luxury cocktail bars in Chicago for flavor, quality, and excellence in the tonic water/mixer category. Since La Pavia pivoted to sparkling soft drinks in May 2017, the company has acquired more than 1,000 points of distribution through seven distributors, has achieved over $825K in retail sales, and over $34K in ecommerce sales.


TEAM

Mary Pellettieri – Co-Founder President and CEO. MS in Public Health, University of Illinois Chicago; 20+ years in beverage formulation and beverage quality.  Mary is an accomplished professional who gained experience in the craft beer trade and then saw an opportunity to pivot to non-alcoholic beverages with Top Note. She applies her beverage quality expertise and her deep network in the craft beverage trade to this company. Prior to starting Top Note, Mary worked in business operations and quality at MillerCoors and Goose Island Beer Company in Chicago, formulating award winning beers such as Matilda, 312, and Sofie. She is also an author and former instructor with the Brewers Association in Boulder.

Noah Swanson – Co-Founder Vice President and COO. Engineer by trade, 20+ years in real estate.  Noah has been self-employed all his career mostly in real estate acquisition and management of assets. He is an engineer by trade, and is the chief of operations, logistics and supply chain management at La Pavia. He manages our co-packing operations and works closely with our suppliers to lower costs and create supply chain synergies with other beverage makes. Noah spear-heads our formulations and manages the output from the R&D and innovation work. 


PRODUCT

Top Note is the beverage mixer for popular highball cocktails such as gin and tonic (tonic water), whiskey/soda (soda water) and Moscow mule (ginger beer). The mixer makes up about 75% of a highball style cocktail.  


Bartenders Choose Top Note for:

  • Advancing their cocktail menu into “premium” pricing
  • Being unique and independent from larger brands (Craft American Made Top Note)
  • Making top-quality highball call drinks, and low proof/no proof cocktails.

Consumers Choose Top Note for:

  • Making a highball cocktail in which the mixer matches the quality of the spirit.
  • Simplicity; 2-touch cocktail, yet making a high-quality drink.
  • Brand cache; it is what they saw their favorite bartender use.

MARKET 

The total addressable market in sparkling beverage mixers (a subset of soft drinks) is estimated to be $4.2B in the US. Unlike in Europe, where the premium beverage mixer market is becoming saturated, the U.S. has a significant gap in total premium spirits consumed (43% of spirits market) to premium mixers, which are <5% of the U.S. Top Note’s initial market is to focus in on capturing the premium beverage Tonic Water category, which is expected to see a 7% CAGR growth in next 5 years, and over $590mm increase in sales. (Business Wire, April 15, 2020)


REVENUE MODEL

Top Note sells business-to-business through the three tier system of wholesalers to retailers. Our primary distributors are alcoholic beverage distributors (3 in 3 states). Our blended gross profit across SKUs is 52%, with the average cost to customer for our products at $6.99/4pack or $0.20/ounce. Top Note added e-commerce channel early in 2020 after Covid-19. 






COMPETITION

  1. Fever Tree - 15 years in business, public UK company. 2018 earnings: $300M

Strengths

Category leader w 50% share in US, and 75% in UK. Strong alliances w large brands. Lots of visibility with strategic spirits partners. 

Top Note can beat FT by marketing to a younger, hipper audience. Its American-made in a craft brewery value hits home to authenticity, while FT is looking like a large CPG company willing to cut costs.

Weaknesses

Multiple SKUs, not American-made or crafted for U.S. cocktail consumer. Discounting lower than Schweppes in Midwest markets. 

  1. Fentimans - Over 100 years in business, public UK company. 2018 Earnings: $260M

Strengths

Seen as alternative brand with deep historical authenticity. 

Top Note is a modern craft mixer compared to Fentimans’ “botanically brewed,” mostly soft drink past. Top Note listens to current trends, while Fentimans plays up authentic old-style soft drinks. 

Weaknesses

More soft drinks than mixers. Not competitive to American likes/dislikes. 


  1. Q Tonic – 13 years in business, private U.S. company. 2018 estimated earnings: $40M

Strengths

System strength in distribution, seen as secondary to Fever Tree in market. 

Top Note sees Q as its target to pick out of market. We have  more authentic story, and more loyalty in our customer base. Top Note can build loyalty as its strength and continue to push Q out of markets as it has in Chicago.   

Weaknesses

When more than 2 brands are presented, Q does not perform as well. Q does not have brand loyalty in on-premise or off-premise accounts. 


FINANCING AND MILESTONES

Round

Closing

Runway 

Amount

MRR

Status

Milestones


Pre-seed


Q3 2019


Q2 

2020


$815K

 

$30K


Closed

10 SKUs developed in 3 packaging configurations (8.5 oz bottles, bag-in-box concentrate, 12-oz. cans) across 5 flavors. Minimum Viable Product and scaling model achieved with new co-packer. Lowered COGS 20%. Landed 2 regional specialty food chains, Costco, and HomeGoods seasonal placements. Expanded to ~1K points of distribution.


Seed


Q4 2020


Q4

2021


$500K

  


$90K


Open

Continue to lower COGS. Line extend to cans for more robust ecommerce sales. Establish Top Note as a key alternative to Fever Tree in 7 cocktail centers across the country (and 5 -10 new distributors). Build to 7K points of distribution.

Series A

Q3 2022

Q4 

2023

$3.5M


$400K

Future

Continue line extensions and offerings in larger retailers. Build to 15K points of distribution. Innovate soda fountain delivery.


COMPARABLES

Acquired

Acquirer

Acquisition Price

Date

Revenue/Traction at Acquisition

Product Category

Seedlip

Diageo

20% stake/ Not disclosed

Aug 2019

$46M

Non-Alcoholic Spirit

MorindaINC 

New Age Beverages

$85M

December 2018

$40M

Non-Alcoholic Soft Drink

Fever Tree

IPO

$202M

November 2014

$45M 

Premium Mixers

Teavana

Starbucks/ABI

$620M

December 2012

$120M

Non-Alcoholic Tea

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