Recess (R)evolution. How This Pivot Helped Build A Relaxation Empire.

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. This episode features an interview with Ben Witte, the founder and CEO of Recess. Upon its much-hyped debut in 2019, Recess was dubbed by the press as the LaCroix of CBD. Although the brand got off to a hot start, the beverage industry cooled on CBD, the result of a challenging regulatory environment for products made with a cannabinoid. In 2021, Recess introduced Recess Mood, a new line of sparkling waters infused with magnesium and adaptogens and marketed as modern relaxation beverages.

1:03Leading with the tagline of calm, cool, collected, the products have become the primary driver of sales for the brand and represent the vision that founder and CEO Ben Whitty said he always had for Recess, a platform of beverages intended to help people relax. The company later added mood powders to the mix and in 2022 launched a line of zero-proof mocktails, one that Ben describes as a natural extension of the brand. Recess has emerged from the pivot as a prime-time player that is sold in over 18 ,000 stores nationally and is one of the best-selling beverage brands on Amazon. It is mentioned and merchandised alongside the likes of high-profile drinks like Olipop, Poppy, and Liquid Death.

1:53In the following interview, I spoke with Ben about how he navigated a shift toward a product mix that realizes his vision of a relaxation beverage platform, how Recess built a thriving online business, how the company utilizes consumer feedback to support its sales and marketing efforts, and how it is preparing for a major expansion in brick-and-mortar retail.

2:20Hey folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Ben Witte, the founder and CEO of Recess. Ben, great to see you. Great to see you too. Excited for our conversation. Yeah, absolutely. I should say, great to see you again. We chatted last week, and prior to that, we've chatted a few times. The first time we spoke was in 2019 for an episode of Taste Radio. Recess was three and a half months into its debut, I think, at that point, and we caught up in New York City at your office. You're based in L.A. now, though. Yep, that's right. It was a COVID move that lasted longer than expected.

2:58Well, it's appropriate for your brand. LA is pretty chill. Recess is all about chill. Exactly. Yeah. You know, I look back to that time in 2019. This was about five and a half years ago. And I recall there was just so much hype about the brand at the time. It was one of the first times people had seen a CBD infused or a hemp infused beverage. And Recess was considered the anchor of that emerging set. In fact, at the time, people were calling the brand the LaCroix of CBD. And it was a bit of a misnomer, though, because the whole concept, the idea behind Recess was not specifically about CBD. Let's go back in time for a second and talk about the origins of the brand and how you envisioned it as a beverage company.

3:52Yeah. You know, first, my background, you know, didn't come from CPG. So the first six years of my career in Silicon Valley and the early stage kind of tech startup world kind of got hooked on entrepreneurship and knew I wanted to start my own company, but also recognized kind of my passions and strengths were better suited for the consumer space. I've always been more of a creative at heart. And so kind of went on on my own in around 2016 to kind of explore different ideas. And that's when it started to feel to me like we were entering this new period in history driven by technology, and it was leaving everyone stressed out and anxious.

4:28You know, Trump had just been elected, which I kind of viewed as the ultimate expression of anxiety. And so I just had this high-level thesis that in the future that we were entering, people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax, you know, as compared to things like alcohol or even tobacco, you know, or other kind of pre-existing kind of unhealthy forms of relaxation. You know, shortly thereafter, I observed the rise of CBD oil, adaptogenic herbs, you know, magnesium, nootropics, even THC, essentially this new class of functional ingredient that was primarily in supplement form, that people were using to reduce stress, to feel calm and to relax.

5:15And kind of the light bulb moment was Red Bull for relaxation. Basically view these emerging ingredients as the inputs into this entirely new space of consumer products that would deliver this value proposition of healthy relaxation. And I think that's an important distinction and insight in the sense that I really never viewed recess or the space back then as the CBD beverage space. I would always say I've never heard anyone call Red Bull a caffeine company. It's an energy company. They were marketing the solution and not the ingredient and obviously built an entire lifestyle brand to market the product to consumers.

5:58And so I took a very expansive view of what was going to emerge here that, again, I defined as the healthy relaxation product space and that it would be comprised of products across a number of formats, whether it's RTD beverages, powders, gummies, shots, that would also be kind of segmented by ingredient type and occasion, whether it's alcohol alternatives, stress relief, sleep. To me, these are all kind of nuanced propositions within the broader kind of relaxation space. And so I think that kind of view of the space that was going to emerge over the years to come really drove our strategy, whether it was the original product line, which included CBD in it, but really we leaned into marketing, the feeling of relaxation and defining the feeling as Comquo collected instead of marketing the ingredients, and then ultimately building a lifestyle brand world around the beverage to connect with consumers.

7:00That's how I thought about the original opportunity for what became recess. And I think that view of the broad space that was going to emerge really has driven our strategy over the past five years. Certainly, being the Red Bull of relaxation is very different than being the LaCroix of CBD. And I agree with you, it's probably better to be the former than the latter. But to be fair, when Red Bull launched in the United States, I don't think many people had heard of the term energy drink. There were highly caffeinated beverages at the time, but Red Bull, in a sense, launched the category in the United States.

7:37Whereas I think relaxation beverages are interesting because there had been relaxation beverages prior to recess. I don't even know if you could call it a category, but there were a handful of products that came out. I mentioned the word chill. The brand that I think of when I think of relaxation beverages was just chill, which was on the market for a short amount of time. Yeah. Look, I think so much of business overall, and especially in the CPG space, comes down to the timing, right? And I know Max Bauman well, and he definitely did pioneer the concept of a relaxation beverage with just chill.

8:11But I believe he launched it in 2009 or 2010. And L-theanine was the only functional ingredient in there. And so I just don't think back then mental wellness, stress, anxiety were top of mind for consumers. I think you really needed the world to get a little crazier over the next six years for it to be kind of a proposition that consumers would be interested in. And in addition to that, I think you also, I think that original kind of CBD wave in 2019, I think was useful, right? Because it kind of established, you know, CBD and then also these other functional ingredients, you know, like L-theanine and adaptogens as functional ingredients that people were using, again, for this proposition of stress relief.

8:58And so we rode that original kind of CBD wave, you know, in 2019, which kind of, you know, helped establish the brand. And but importantly, again, we were not marketing the ingredient. We were really focused on kind of marketing the feeling, you know, again, that we defined it as calm, cool, collected. And so I think it was a combination of factors. You know, again, I think that 2018, 2019 period was just a better moment in time to really launch and execute on a relaxation beverage. I think you needed additional ingredients besides just L-theanine to be able to infuse it to deliver that proposition.

9:33And then I also think our approach was the right approach in terms of the brand of recess, leaning into the idea of taking a recess, launching both originally direct to consumer and then immediately moving into New York City where we first established the retail business and the up and down the streets, up and down the street accounts there. And so I think, look, I think there's just a variety of factors at play that made when we launched the right time to really establish this category. I want to unpack a couple of things you said there. First of all, you said you never really focused on CBD as being the most important part or the focus of recess, but a lot of other people did.

10:16You know, whether it was the New York Times or People Magazine or what have you, everyone always associated one term with the other, CBD with recess. How hard was that to shed, especially once you got into 2020, 2021 and got into new categories like your mood beverages, which are enhanced with magnesium or your non-alcoholic cocktails. Do people still associate recess with CBD because of all that hype from the outset? It was one of these things where I feel like the press and perhaps some distributors perceived us as a CBD beverage, but it was very clear to me that consumers were not. I think one of the most important things when you're building a consumer brand is to listen to your customers.

10:59And one of the things we always had was just a tremendous amount of user-generated content in Instagram at the time. And it was just obvious that people were not talking about recess as a CBD beverage. They were really leaning into the usage occasion of relaxing at the end of the day or in the afternoon and the feeling that we delivered. Right. And so I do think there was this disconnect from how consumers thought about the brand and how it fit into their lives versus how the press thought about us. And, you know, perhaps how some distributors and retailers thought about us. And again, I just think from first principles here, again, why wouldn't they have called the energy drink category the caffeine category?

11:47You know, I think there's a lot of parallels here. Energy drinks also have chlorine in them, too. So they're really combining different functional ingredients together to deliver that stimulation effect, just like we combined different functional ingredients to deliver that relaxation effect. And so I've always believed that we were somewhat of a misunderstood brand from the earliest days. And so I think there's more to shape with, again, the press and distributors than with consumers. Yeah, and I want to talk about brand building because, I mean, that was the first thing I noticed when I saw Recess was this was an amazing brand.

12:28Still is obviously an amazing brand, but from your packaging to the vibe to just the core of what the brand represented felt so novel. And in some ways it felt very specific. It felt like this was for a new type of consumer. It was for that younger type of consumer, the millennial brand, so to speak. It's grown beyond a age demographic, I would say. But, you know, talk about the idea of creating something that would resonate with a specific group at the outset and then be flexible enough to talk to other folks. Yeah, I do believe in the importance of, you know, focus to begin. And I think, look, there's two additional insights, I think, unique insights at the time besides just the premise of a relaxation drink.

13:18Back in 2018, having come from Silicon Valley and the tech world, I was really shocked that no one was talking about both e-commerce as an initial distribution channel and also the opportunity to leverage social media. At the time, just Instagram and Facebook for digital brand building. And so we launched the company out of my apartment, direct to consumer. And I think we were one of these, the first kind of true digitally native beverage brands. And we really focused on kind of our Instagram strategy to begin and created this pretty compelling brand world in Instagram that clearly connected with consumers and got a lot of virality to it.

14:03And so that kind of helped kind of put us on the map. And then we moved into New York as our first retail market. And we were really focused to begin on kind of the creative community in New York. And I do think there's a lot of benefits to going deep first before you kind of expand. And that's what we really did our first year in New York City. We had a pop-up in New York called Recess IRL, which was quite impactful. Love that place. I visited and I felt like I was in, I don't know, some sort of magical room. But well, it was more than just a room, but it was it was very different. Yeah. Than any kind of IRL experience I had seen before.

14:45Yeah. And one of my beliefs is like being unique is very underappreciated in the CBG world, right? I think it's hard to be hard to be on. Yeah. Yeah. Being unique is kind of how you break through and kind of how you ultimately create value. There's a lot of me too brands. And if you're just basically acting like everyone else, you're just going to not be able to break through. And so we were really focused on thinking differently, thinking from first principles, being willing to reject the conventional wisdom when it made sense. And that's what I think, again, helped put us on the map this first 12 months.

15:25Digitally native brand. I think of another digitally native brand. and I'm not picking on them, but they haven't done as well as Recess. They weren't able to scale in the same way that Recess was and that was Dirty Lemon. You know, what did you do right, in your mind, what did you do right from a digital perspective that helped you get to a place where you are now, where you're still doing quite well digitally? I mean, when we spoke last, I think you said it's over 50 % of your business is online at this point. Yeah, look, I think Dirty Lemon thought about themselves a pure kind of direct-to-consumer brand when I never viewed ourselves as a direct-to-consumer brand.

16:00I viewed it as a digitally native omni-channel brand, right? Where you'd want to kind of establish the brand awareness and drive trial with consumers online before you went offline, right? And so I think that the simple kind of distinction of thinking of ourselves as an omni-channel brand, not a direct-to-consumer brand was the right approach, right? Obviously, beverages are unique in the sense that You know, beverages get more distribution than literally any other product on earth, right? Why is Topopola the biggest brand in the world? Well, it's because it's always around you, right? And I think that's, you know, beverages that succeed, you know, ultimately get to scale, you know, offline.

16:40But I think there are significant benefits to also having a strong kind of e-commerce business as well that I can talk about. Yeah, I want to get to that and how you've been able to create such demand on platform like Amazon, but I do want to back up for a sec because in 2019 and probably a little bit into 2020, I think the idea, the concept that you had was still a bit of a thesis. Yes. You know, proving the concept, identifying the trends that you could say and point to as, yes, this is proving out my belief that relaxation can be a big category, can be the next big beverage trend happened after that.

17:22How did you go about proving out your thesis in so many ways? Yeah. Look, it was obviously a thesis that I had before we launched it. But to me, within a few weeks, it was pretty clear that the idea was connecting with consumers in the way we intended it to. And again, I just would always, I really believe, looking at your user-generated content and really tracking how consumers kind of talk about your brand in social media is the most kind of valuable data and set of insights that you can have. And so, again, within short order, it was just very clear to me that people were drinking recess to relax and unwind, which was really this kind of fundamentally new kind of value proposition.

18:11I think back then, it started to become clear that mental well-being was this kind of health outcome that consumers were increasingly adjusting their lifestyle around. Back then, you started to see the rise of things like therapy or mindfulness, which had gone from very taboo to talk about to very accepted to talk about. And so what I believed is that that idea would make its way into the products that we consume. I would also cite products like Calm Magnesium Powder. Calm Magnesium Powder was a brand that was owned by Clorox. That was, I think at the time,$100 million a year of business. And the insight that drove Recess Mood was people were drinking the original version of Recess and Calm Magnesium Powder for the exact same reason, to feel calm.

19:02And that's what inspired me to go explore magnesium and also explore powders. And so I think it's about, I think connecting dots is very important. And that's not, back then, that was definitely not showing up in the SPINS data. That was more looking at these other things that were happening broadly in society. That kind of helped validate my thesis. One of our taglines is, an antidote to modern times. that premise that, like I shared at the beginning, that we were entering increasingly stressful times as a result of a rapidly changing world. And people would be looking for various solutions to help them reduce stress and relax.

19:43And so I was just always deeply believed in the vision that me and the team had here and that every day that went by, we were getting validation of that. And so I think kind of having kind of conviction is very important. And then one of my favorite lines is this Jeff Bezos line. He said, basically, to do anything kind of truly innovative, you have to be willing to be misunderstood for long periods of time. And that's how I kind of feel the recess story has been to an extent, right? You look at the bet we made on magnesium in 2020. No one was talking about magnesium at the time. And to me, it was a secret hidden in plain sight.

20:25Right. Just look at the brand call. Right. That's all you had to do. And so I think it's, you know, identifying kind of unique insights before they're obvious to the market, I think, is fundamentally the job of the entrepreneur. Right. Because if it's obvious, then it's probably already established and, you know, everyone's doing it and you're not going to be unique and differentiated enough to build something truly valuable. That said, look, I think there's two different business plans in CPG. You can either go into an existing category that's established and try and capture market share, like Prime did, for example, in the sports drink space and many other examples of that.

21:03Or you can lead the development of a new space or a subcategory within an existing space like Liquid Death did within water with a unique dimension and cans to begin, but ultimately it was very much a brand play. So I really encourage, I really believe in the importance of figuring out what is your unique insights that you have that's going to ultimately drive your strategy and your brand positioning and really, really lean into those. How did consumers perceive a magnesium-enhanced beverage or magnesium-infused beverage and think about it not just as like some sort of own functional product, but as something that they could incorporate into their daily lifestyles.

21:47Yeah, taking a step back, I always had the vision that recess would become a brand platform. And I did have a view that I think platform brands, you know, would be a bigger and bigger part of the future. And I use this simple example that, you know, our URL on our Instagram was take a recess, not drink recess. Right. As the vision was, there would be lots of, many forms of recess that we could create over time. And what really accelerated the vision of becoming a platform was, you know, ultimately the lack of regulatory clarity on a federal level for CBD, which prevented us from entering the national retailers and Amazon, right?

22:27So we had this, you know, I'd say a business challenge, right? In the sense that we had a product that consumers loved and was working, you know, online and at retail, but we couldn't scale it into the places where, frankly, 95 % of the volume comes from, which is the big box retailers and Amazon. And so fortunately, I think I had the right view of this space and thinking of it as the relaxation space and thinking of recess as a relaxation brand and kind of accelerated, again, the platform vision with the launch of Recess Mood, which was fully compliant on a federal level and allowed us to enter the national retailers.

23:08But that said, look, it took time. We first had to, again, validate with consumers that they valued the idea and that we delivered the same, if not better, efficacy. In some ways, I actually think magnesium is more efficacious than CBD and then also have the right positioning. In retrospect, it was obvious to pivot beyond CBD and many of the other CBD companies did, but many of them pivoted into immunity at the time because that was the hot thing because of COVID, right? But our vision was to continue to build Recess as a relaxation brand. And look, it was just one foot in front of the other. Like, let's first launch it online, then launch it in retail, originally in the independent accounts.

23:51And then we started to get into some regional chains and then the national retailers. And ultimately, the most important metric in Beverage is your retail sales velocity. And those were always strong for us. And so over time, we just had a data story to be able to continue to share with buyers. And they started to pay attention to their recess brand. And then they understood the trends around that people that were shopping in their stores were struggling with mental health. And they were, again, looking for healthier ways to reduce stress, relax, and moderate their alcohol consumption. And I think it was almost a situation where the consumer was ahead of the market.

24:29and we really kind of met the consumer where they are and had the right approach from a brand positioning standpoint and a formulation standpoint. And it's obviously really started to take off. I feel like that data story becomes a lot stronger when you are or getting prime placement for the brand. And prime placement these days means being aligned with or next to fast growing brands like a Poppy, an Olipop, even a Liquid Death, where I do see recess. I mean, if I go into any mainstream retailer or natural retailer, I start to see like they're all together, which is kind of surprising. I mean, how did you convince or did you have to convince retail buyers that merchandising recess next to or near these other brands was the right idea?

25:23Yeah, look, I think we are extremely complementary to Poppy and Ollipop. We're definitely not competitors. Those are fundamentally kind of healthy soda brands first and probiotic soda brands second, in my opinion. We're a relaxation brand. And one of the behaviors we often see is that a consumer will grab a Poppy or Ollipop and recess in the same store visit. And the consumer behavior is they're going to drink their Poppy or Ollipop maybe at lunch or during the day, and they'll enjoy their recess in the evening instead of a glass of wine. And so we really view them as complementary brands to us with a very similar customer profile.

26:01So we really love being next to them. Another point is I think it's somewhat overstated that you need an established category to exist. Obviously, there wasn't a relaxation or mood enhancement category in the beverage section at retail. There was in the supplement section with brands like Calm and Olly Gummies, but there wasn't in the beverage section. But just like there wasn't a healthy soda section, right? When Poppy and Ollipop launched, they really took space from kombucha. Beverage sales and merchandising is like kind of hand-to-hand combat, right? We have a field sales team. They're going into stores every single day, and you're kind of fighting for space.

26:42and I think the categories are broader than I think is conventional wisdom. Oftentimes we're in, it's the broad functional beverage set or the enhanced water set, right? And obviously recessed mood kind of fits both of those definitions. So those are, I'd say, factors that really led us to, for that line to be merchandised next to Poppy and Ollipop, which again, we love and we respect those brands but view them as ultimately complementary brands, not competitive brands. Quick break. If this episode has you thinking about what's next in food and beverage, explore BevNet and Nosh Insider, our subscription platform with deeper insights from the BevNet team.

27:19Visit tasteradio.com slash insider to learn more. I like that you brought up usage occasion. You had already, but you brought up, you know, recess as recess mood as a potentially evening beverage for folks. I mean, I would drink a recess mood with my lunch. I mean, I could have that just as easily as a sparkling water or a better for you soda. But when I think about that evening occasion, I do think that your non-alc or your mocktails are probably what I would reach for first. Did you, when you were building out the platform, did you think about that daytime occasion, that evening occasion, as much as you did, hey, I'm trying to create a platform that can fit the term relaxation holistically?

28:04Yeah. So let's just start with like, what is the definition of relaxation? Some people think of relaxation as like sitting on the couch, right, and chilling out like that. But the definition of relaxation is, you know, being free from tension and anxiety. I think one of the unique insights is that many occasions for alcohol are fundamentally about relaxation, right? When you're, you know, trying to relax at the end of the day, traditionally, you know, people would often turn to a glass of wine, you know, to enjoy, you know, before dinner, with dinner or after dinner to kind of relax, unwind and take the edge of it.