Grinds Coffee Pouches
DEAL
EPISODE SUMMARY
🕓 Air Date: February 8, 2013
Asking For:
$75,000 for 10%
Investor:
Daymond John, Robert Herjavec
Deal:
$75,000 for 15%
PRODUCT SUMMARY
Grinds Coffee Pouches provide a healthy alternative to chewing tobacco, infused with freshly ground coffee, B vitamins, and other nutrients, offering an energy boost without the harmful effects of tobacco.
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Background Story
Pat Pezet and Matt Canepa, former college baseball players, founded Grinds in San Francisco, California. Their journey began when they recognized the prevalence of chewing tobacco in baseball and sought a healthier alternative. Their experience playing baseball and witnessing the unhealthy habit inspired them to create a product that would help people quit tobacco. They developed the idea while brainstorming during their college days at Cal Poly, where they experimented with using coffee grounds as a source of energy.
This led them to create a prototype for coffee pouches, which gained traction after pitching at a business plan competition. With initial seed money, they launched their product at spring training events, gaining the attention of major league teams such as the San Francisco Giants. Despite facing challenges and low sales initially, a testimonial from the Giants’ manager spurred them to refine their product and distribution strategy.
The Product
Grinds coffee pouches offer a convenient and healthier alternative to chewing tobacco. Each pouch contains ground coffee infused with B vitamins and other nutrients. Users simply place a pouch in their mouth for a caffeine boost, eliminating the need to chew tobacco.
The product comes in various flavors like mint chocolate, cinnamon roll, and mocha. One pouch provides the equivalent caffeine content of a quarter cup of coffee, with each can containing approximately 20 pouches. Grinds aims to target not only baseball players but also broader markets interested in energy and coffee products.
How It Went
The company’s position before Shark Tank
Grinds has steadily grown its sales since its inception. In 2010, they generated $3,500 in revenue, but by 2011, their sales increased to $135,000. They project reaching $300,000 in revenue by the end of the current year. The company has established partnerships with over 20 major league baseball teams, including the Chicago Cubs and Boston Red Sox.
Their current funding primarily comes from investors like Daymond and Robert, who offer strategic guidance and capital for expansion. Grinds sells its products both directly to consumers and through retail channels, aiming for a retail price of $3.99 per can and a wholesale price of $2.69 per can. They continuously work on improving their manufacturing process to reduce costs and increase profitability.
The Negotiations:
Pat and Matt initially sought $75,000 for 10% equity but received multiple offers during the negotiation. Barbara and Mark opted out, citing personal preferences or concerns about market competition. Kevin offered $100,000 in exchange for a royalty per unit sold.
Daymond and Robert eventually struck a deal with Pat and Matt, offering $75,000 for 15% equity, emphasizing their expertise in distribution and strategic partnerships. Despite some hesitation over equity versus royalty, Pat and Matt accepted the offer, excited to collaborate with Daymond and Robert to expand their product’s reach.
