European birch water startup ÖselBirch has received interest from purchasers in Mexico and Brazil and one expert believes the product could work with the right entry strategy, but there are numerous challenges facing such a long-distance expansion of this nutritious tree water.
Made from the sap of birch trees – a hardwood tree native to countries with a boreal climate – birch water is rich in electrolytes and antioxidants, contains trace vitamins and minerals and is naturally low in calories. Touted as a premium 'super drink' as the sap can only be tapped during a two-week window each year, birch water is primarily valued for its hydration, anti-inflammatory and detoxifying properties.
Estonia-based birch water startup ÖselBirch, established in 2016, has six organic beverages, including fermented and fresh variants. Currently stocked nationwide across Estonia, ÖselBirch is also available online to all DACH markets (Germany, Austria and Switzerland), with plans to enter retail in these countries by early Spring.
Anne-Liis Theisen, co-founder and marketing manager of ÖselBirch, said the company was recently approached by interested purchasers from Brazil and Mexico at the 2018 Wabel Drinks Summit.
“It really did surprise us,”​ Theisen told NutraIngredients-LATAM, particularly as ÖselBirch had been totally concentrated on European expansion and upscale.
“The market is apparently saturated by coconut water, which is so common over there. Birch water could have a good chance, but the entry into the market would require a lot of explanation work and marketing activities,” ​Theisen said, given the lack of birch water knowledge there.
Tom Vierhile, a Fairport NY-based new products expert, said if a strong distribution network was secured, a birch water launch into LATAM could work.
“The beverage business is very much a distribution game. The more doors a brand can squeeze into, the greater the odds of success. If ÖselBirch can obtain a decent amount of distribution in new markets like Mexico and Brazil, the brand will have a shot at making it. But, that will undoubtedly depend on the resources of the distributors that the company will be relying on in these markets,”​ Vierhile said.
Certainly for a startup with crowdfunding roots, he said a shift into LATAM could stretch business too thin.
However, Vierhile said another challenge far bigger than consumer education would be pricing, given birch water was a “tricky product to produce” ​and therefore carried a premium price tag.
Theisen agreed that even for some European consumers, the price tag remained too high. ÖselBirch's 330ml bottles, when ordered online including delivery, cost €4 – the equivalent to US$4.50.
“We definitely need to get our production price down but until we find a good production partner that won't be possible,”​ she said.
Birch water, particularly fermented variants, was proving too complex for many third-party partners to want to take on, Theisen said, and securing the right amount of birch sap was also difficult given there was just a two-week window in Spring to tap from the tree.
Aside from all this, though, Theisen said shipping such long distances didn't align with ÖselBirch's founding principles on being an environmentally-friendly brand.
Another option would be to develop a syrup or concentrated version for final production in-country, but she said that would take the product too far from its fresh and natural origins.
Vierhile, however, said this could be how Latin American markets start to see birch appear – as a “hero ingredient”​ where a small base amount is used and blended with purified water or fruit juice. Not only would this drive pricing down, it could also improve sensory appeal, he said.