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Entrepreneurs aim to deliver custom beverages

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Mad scientists, rejoice: An Indianapolis startup is rolling out a make-your-own-soft-drink campaign its founders hope will become the YouTube of the beverage industry.

The idea is simple, even if the execution isn’t. Customers will be able to choose the ingredients for custom-made concoctions and design their own labels, then uFlavor will make and sell the drink—to its creators and the general public, who’ll be asked to rate the finished product.



Some undoubtedly will fall flat. Others could be the thirst-quenching equivalent of an especially cute cat video. But it only takes one Honey Badger to get the world’s attention.

“There are a lot of bad videos on YouTube, but the good ones rise to the top,” said uFlavor Chairman Michael Cloran, a serial entrepreneur and founding partner of locally based firm DeveloperTown. “This doesn’t work without the power of social recommendations and voting.”

And given the size of the non-alcoholic beverage industry—$178.5 billion, according to the American Beverage Association—uFlavor doesn’t need to corner the market to be successful.

After pitching the idea at the monthly Verge tech networking meeting Thursday (see video above), Cloran and fellow execs jumped on a rented bus for a 6,000-mile road trip to build excitement for the concept—and take pre-orders for their customized version of drinks created by three beta “flavorists": Zappos founder Tony Hsieh, SEOmoz CEO Rand Fishkin and local restaurateur Neal Brown.

Brown visited the FONA International flavor house in Chicago, tapping his culinary experience to come up with 317, a naturally sweetened soda that combines the flavors of Clementine, Tonka beans and stone fruit.

Neal BrownLocal chef Neal Brown works in a Chicago flavor lab. (Photo courtesy uFlavor)


The owner of Pizzology in Carmel and The Libertine downtown, Brown called the drink-making experience enlightening. “It was a real education,” he said.

The first batch of beverages will be delivered in late January, when the process of creating the next round of drinks will begin based on customer feedback. By summer, uFlavor hopes to have perfected the equipment that will allow anyone to design a drink from anywhere.   

“That level of mass customization is pretty intriguing,” said Jerry McColgin, founder of Carmel-based production and design firm Insight2 Inc. “Everyone wants something that is uniquely their own. They’re onto something there.”

Brown concurred.

“It’s one of the biggest trends out there right now,” he said. “There’s no reason uFlavor can’t be in the forefront of that."

McColgin, who has no connection to uFlavor, also praised the company’s slow-but-sure rollout strategy. Rather than immediately go to market with a product that’s new to consumers, many firms have had success generating buzz first.

“You want people waiting for it, watching for it,” he said. “But ultimately, your product has to live up to the expectations you create.”

Cloran and his partners have been working on uFlavor since 2009, when he pulled the concept out of his “ideas” folder. His original brainstorm came about 10 years ago: a vending machine that could produce any drink in the world.

“It was a crazy idea, too hard to build” said Cloran, 43.

Then he met Purdue University graduates Nathan Altman and Mike Mitchell, fellow entrepreneurs who met as members of Carmel High School’s award-winning robotics team. They thought they could pull it off, and they did.

A prototype was on display Thursday at DeveloperTown, which also invested in the project, but the partners decided it made more sense to build the online marketplace—and line up additional funding—before mass-producing the machines.
 
Home soda-making equipment already is sold at thousands of retailers. Market leader SodaStream, for example, allows users to choose their own syrup, bottle and carbonation. The partners say uFlavor breaks down the process even further.

“We really want to open up the ‘black box’ of the flavor industry—how different acids affect the tongue, how different tastes unfold,” Cloran said.

Cinnamon gives Coca-Cola its characteristic bite, for example, while Pepsi dials up the sweetener.

uFlavor’s founders worked with FONA to get a feel for how to blend flavors, and the company’s flavor scientists helped tweak the first three drinks to get them just right.

A single custom soda sells for $9.99 on uFlavor’s website, an eight-pack is $29.99 and a 24-pack is $59.99—all with free shipping within the continental United States. Once users start designing their own flavors, the company plans to use the Threadless model and give creators a share of the proceeds.

The partners hope to return to Indianapolis in two weeks with some sales in the books, which could help them line up additional funding. They declined to disclose financial details, but Verge CEO Matt Hunckler is chronicling the trip online.

“It’s always exciting in a startup environment when people pay you,” said Altman, uFlavor’s CEO and “prime minister of choice.” Mitchell is chief technology officer and “viceroy of variety.”

The men, both 24 and partners in DeveloperTown, will be working full time on uFlavor. Cloran, the chairman and “flavor emancipator,” will devote one day a week to the startup.

“In six months, we’ll have a really good indicator of its success,” he said.

 

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  • What about alcohol ?
    I agree that $9.99 /unit is too high to be commercially viable, though I imagine their business model expects that to come down considerably with volume. However, given the broad range of beverage flavors, both carbonated and still, currently available this is a tough market to break into. Alternatively or concurrently, I could see a real opportunity in customers being able to make a base flavor mix for custom cocktails. Organizations, restaurants and other entrepreneurs could then market their unique creations to an audience that would likely support a higher price point for an alcohol compatible mix rather than just an expensive, though ready to drink product. In a sense it could become the alcoholic drink mix corollary to the craft beer business! I’m just sayin’.
  • Too high of a price
    $9.99 for a soda?! good idea that will not make it. Who is going to pay that much for a drink? Most people won't even pay that much for a meal these days. Good luck to these fellas though.
  • Interesting Article
    Interesting article

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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