Founded in early 2021, Mitra9 makes products featuring kava, a plant from the pepper family that provides relaxation benefits, and kratom, a leaf that produces an energy boost. Currently, Mitra9 offers a kratom seltzer, a low-carbonate kava sparkling liquid product, a powdered format, and a kava and kratom shot.
The idea for the brand came after Vasquez visited a Florida kava bar and wanted to find a way to bring the history of kava and its mood-boosting functionality to consumers in an easy-to-consume format.
"Tons of people [have enjoyed kava] for a very long period of time, and we thought that we could turn that into something that is a little more consumer-friendly, and that just simply tastes better. So, that's what we went out and did. [It took] eight, nine months of research and development to find out a way that we could take this root, turn it into a 12-ounce lightly carbonated [product] that tastes like any other flavored water or energy drink ... on the market so that everybody can enjoy it."
The regulatory landscape for kratom and kava
Kratom and kava are both controversial ingredients from a regulatory and safety perspective and could face market limitations. Similar to CBD, the FDA maintains kratom is not a legal dietary ingredient and multiple New Dietary Ingredient notifications for it have been rejected by the agency. However, like CBD, some states allow for the sale of kratom, according to the American Kratom Association. Kava, likewise, came under the microscope in 2002 when FDA warned that kava-containing dietary supplements may be associated with severe liver injury. FDA does not currently list kava as General Recognized As Safe for use in food.
Mitra9 sells its kratom beverages with a Nutrition Facts panel and its kava-containing beverages with a Supplement Facts label. Dietary supplements cannot be sold as drinks, according to FDA guidance, which takes the serving size into account when distinguishing between supplements and conventional beverages.
"We understand that there are varying opinions on kratom, and we acknowledge the importance of addressing concerns related to its safety. At Mitra9, our commitment to consumer well-being is paramount, and we prioritize transparency and responsible information dissemination. Consumer education is a key responsibility at Mitra9," Vasquez said.
He added, "Furthermore, we advocate for responsible use and encourage our customers to consult with healthcare professionals before incorporating kratom into their wellness routines. It's important to consider factors such as individual health conditions, medications, and personal tolerance levels."
Reformulating with an eye on natural channels, non-alc space continues to grow.
This month, Mitra9 released a reformulated version of its seltzer waters, which increased the amount of kava in the product to match traditional levels, Vasquez said. The company has also reduced the number of ingredients in the product and switched from sugar to stevia for its sweetener as it looks to expand into local and national retailers in 2024, he added.
“We're gearing up for several regional and national chain launches, and a lot of those launches are in natural-food stores,” Vasquez said. "So, you start to look at your ingredients, and you want to offer the healthiest ingredients that you can. In our case, we also focus on having a can that has maybe 5-7 ingredients as opposed to 40."
The reformulation taps into larger consumer demand around better-for-you and functional beverages, he noted. Mitra9 is also leaning into the functional benefits to capitalize on those looking for a non-alcoholic products, where THC, CBD, and hemp products have also been catching on, he added.
“In the last six months, [Mitra9] started to partner with Anheuser-Busch and Miller Coors distributors, and they all tell us the same thing. They are trying to build their NA portfolio because they have got declining revenue in some of their core portfolios, which is a crazy phenomenon for them - one they have probably never had in their entire history. Most of those distributors are third, fourth generation businesses, and here they are in 2023, with declining beer sales, and they are spending a ton of time going out there and finding the leading functional NA beverages.”
Startup tips: Cutting distribution cost, going it alone
Like many other beverage startups, Mitra9 is navigating the challenges of tighter capital markets and increases in the cost of doing business from retail to distribution. However, the company is finding ways to cut costs and increase margins by focusing on local distribution and building out its digital capabilities, Vasquez said.
Many of Mitra9's retail locations in Florida accept direct store deliveries, so the company will run deliveries in a 100-mile radius to reduce distribution costs. Vasquez also noted that many startups run into issues when committing to a distributor like KeHE too soon in terms of honoring commitments and managing the costs associated with a major distributor.
"One potential mistake startups make is maybe getting in business with a KeHE just a bit too early. KeHE is a big business, and they are very dialed in, they know what they're doing, and if you are a startup and you haven't built out your infrastructure yet, ... KeHE is going to have the leverage, the advantage there,” Vasquez said. “Brands make [the] mistake all too often where they're not focusing on higher margin channels like e-commerce, direct-to-consumer, [and] direct-store delivery."
While many startups have focused their effort on retail, Vasquez still sees an opportunity for his brand with direct-to-consumer (DTC) and e-commerce more broadly, creating another avenue to save money by shipping products directly to consumers.
"I just look at [DTC] as one channel where we get to control our destiny a little bit. We built a very good loyal following on social media. We have products that have a super loyal customer base. ... About 68% of the people that buy Mitra9 buy Mitra9 again," he said. "It's probably tough if you're in a very competitive market like water or energy drinks when it's going to be a little tougher to keep up a loyal fan or a loyal customer base, but for us in a limited competitive landscape, it's absolutely essential to running a profitable business."