Login | December 14, 2019

Ohio native plays crucial role in Clearly Canadian’s resurrection

KEITH ARNOLD
Special to the Legal News

Published: November 26, 2019

Ask Robert Khan how he should be identified relative to his part in resurgent brand Clearly Canadian's return to production and profitability and he says, "Turnaround CEO."
He's not the founder, a title reserved for the man who introduced the brand of sparkling, fruit-flavored water back in the late 1980s - Doug Mason.
Nor is he the current CEO. He handed over the reins to Paul Tepperman, former head of Party Canada, in early 2017.
He does sit on the board, but Khan's specialty is the turn around. He's the quintessential idea man.
The 44-year-old Toledo-area native says he was toying around with the idea of developing a different type of beverage at the time he learned that the brand was bankrupt.
"I had always wanted to do a cognitive-enhancing beverage, not like an energy drink but a focus drink," he explains, noting that he already had begun to incubate the project in mid-2011 when he heard about the brand he says he grew up with.
He was on his way to a wedding when someone mentioned the brand was for sale.
"I thought it was a complete joke," Khan says. "Absolutely thought it was a joke."
He was certain he had seen the distinctive tear-drop, clear glass bottles on store shelves just a week earlier. He reckoned he hadn't drunk a bottle since 1994, but that the brand was in production and sold widely.
"So, I began asking people, 'Hey, have you had a Clearly Canadian lately?'" Khan continues. "They'd say, 'Oh, yeah. I just saw it at Kroger just a few weeks ago.'"
He quickly noticed people weren't answering the question precisely. Rather, they were conflating thinking they had seen the item on store shelves with actually purchasing the product.
"And that's when I realized that this was a very important opportunity," he says. "So, I put the cognitive-enhancing project on hold and went to New York and negotiated the purchase of the brand, really on the basis of the fact that there's a huge community behind (the product) that nobody's organizing properly."
His natural entrepreneurial spirit was fostered by growing up in the shadow of Toledo - a once-powerful industrial giant.
"My father's family was a very hard-working, small-business family that moved here from India in the 1940s," Khan recounts.
His mother's family farmed land west of the big city in the vicinity of smaller towns, such as Wauseon and Metamora.
"I grew up in the summers on a tractor, running around with my cousins out there," he says.
Despite having to rebuild the supply chain, go to the extra trouble of resurrecting the iconic glass bottle and funding all of the work, Khan characterizes the revival as more an exercise in organizing the fan base than anything else.
"We're very well known from about the age of 35 to 70; it's quite a wide range, covering a lot of demographics," Khan says. "We have (brand) recognition of about 85 percent."
The only thing missing was the community.
And community is a big deal for Khan.
"We hope to be more than just a beverage brand," he says. "We see ourselves as an emerging Ben & Jerry's or an emerging Patagonia, but just in the beverage-and-food space versus ice cream and apparel."
The company envisions the Clearly Charity Challenge in which the company pledges 5 percent of gross revenues every year to any number of causes that resonate with the brand's community.
"We hope to have the program live by next spring," he says. "It's what will connect us further with the community and the consumers at large.
"So, we absolutely see ourselves going forward as a Canadian progressive, activist brand and wherever that leads us in the U.S. market, so be it."
The company, which Khan boasts has been profitable since Day 1, is bottling at two plants in Canada, with a third plant in the works. Expected output for the year is between 500,000 and 600,000 cases nationally.
"We're hopeful to see that (figure) really explode into the millions of cases in the next three to four years," he says. "But we recognize that will only be possible with truly the organic support of both fans and industry people."
He admits retailers are at-first skeptical about selling the sparkling water at full price, despite reassurances it will sell without a discount.
"Then, boom, they see it happen and they're like, 'Oh, this is actually happening,'" he explains.
The product is sold in about 6,000 U.S. grocery outlets (Kroger, Meijer and World Market stores in Ohio) across the country and Khan expects to hit between 25,000 and 30,000 outlets across all channels, once the company is hitting its stride.
"We definitely are stable and growing today," he says.
The fact that the turnaround timeline came short of expectations - it took an additional three to four years to stabilize the company - hasn't disappointed Khan.
He estimates the company's growth at about 20 to 30 percent, characterizing it as significant considering there is no marketing budget.
Again, he credits the beverage's fans - Ohio's, in particular.
During a three-year, online presale campaign, the brand secured a faithful following of 45,000 fans "of which a good 1,000 are in Ohio," Khan says.
"I came from a pretty stable background. I wanted to revive Clearly Canadian, first and foremost, because I thought it would be fun, not because it would be immensely profitable," he adds. "There's a lot more money to be made staying in London and New York in finance than in food and beverage. Food and beverage, I've learned the hard way. This is not an easy industry."
Especially for a beverage company resuscitated from near-nonexistence.
"People didn't realize how small Clearly Canadian was and still is," Khan says. "We are six, seven employees managing much larger groups and so, the fans and industry often expect us to have the infrastructure of Cleary Canadian circa 1999.
Even at its peak in the mid-1990s, the company operated 12 bottling plants and had only 300 employees.
Khan also credits a fellow Toledo entrepreneur and Heidelberg Distributing for much of the company's early success, the latter for taking on the beverage maker for statewide distribution and the former for developing an in-house online crowdfunding campaign.
He says the company's relationship with its first statewide distributor is important for further growth in the Buckeye State, which he expects to be a model for expansion into southern and eastern U.S. markets.
Complementing the Ohio distribution plan is the company's 115,000-square-foot distribution facility on the Maumee River. The product is shipped there via train from Vancouver.
And the company's relaunch campaign could've easily imploded had Toledo Spirits Co-Founder and CEO Andrew Newby not offered up his crackerjack team to develop a completely native crowdfunding program for Clearly Canadian's presale campaign.
"(He) was like 'Rob, I got this; I've got a software team, we'll do it,'" Khan recalls.
Similarly, Khan credits Northwest Capital Partner Jim DelVerne for a loan to bolster early operations when no other capital streams existed.
"Our express focus as a private company is to provide an authentic North American alternative to the European water brands," Khan declares. "That's where we fit in as a brand."
The company seeks to unseat the likes of Nestle and Perrier with its Clearly Sparkling product, which previously had never been sold in U.S. markets.
Clearly Sparkling joins the brand's four flavored, mid-calorie offerings: Mountain Blackberry, Country Raspberry, Orchard Peach and Wild Cherry.
Khan's assessment of the brand's future? "As long as Canada is here, Clearly Canadian has a place on this earth."
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