Australian soda and mixers group Capi has gone from zero to $20m in annual sales in a decade, taking on Perrier and San Pellegrino

A decision by Australian premium soft drinks and mixers company Capi to expand from bars and restaurants to the retail channel has paid off in a big way, with the group's sales accelerating 40 per cent to $20 million in the past year.

Founder Pitzy Folk says Capi has been able to succeed in a highly competitive field with its fruit-based sodas and unique flavours including pink grapefruit, blood orange and spicy ginger. It has focused on the premium end of the market, tailored for Australian consumers.

Capi Acting CEO Kate Solly and founder Pitzy Folk. The company's soft drinks and mixers have been generating strong growth. Eamon Gallagher

The business was started in Victoria in 2013 and has delivered its best growth in the past 12 months. It came after what Mr Folk described as a tough time in the pandemic, which hit the hospitality industry hard.

"It's a pretty scary journey. It requires a lot of capital and guts. You have to back yourself and leave your ego at the door," he said.

Capi's mineral water ranges have been stocked in some Woolworths supermarkets since the start of May. Its products have been on the shelves of Coles supermarkets for some time, and Endeavour Group's Dan Murphy's chain has also been a big backer.

Acting chief executive Kate Solly said the retail channel now made up about 35 per cent of total sales, with 65 per cent from on-premise venues such as restaurants and bars.

She expects that retail component to gain further momentum as the group, which makes about 20 varieties of sodas and mixers, keeps a close eye on what Australian consumers want.

"A lot of our competitors don't have a product for the Australian palate," she said.

Capi uses a contract manufacturing model, and its products are bottled at a plant in Kyneton in country Victoria.

Ms Solly said being 100 per cent Australian-owned was a strong selling point, and also helped in combating inflationary costs in raw materials and packaging because of the reduced transport and shipping burden compared with those relying on overseas deliveries.

"We haven't had those big import costs," she said. The company still had to increase prices to offset inflation in supply chains, but Ms Solly was reasonably confident that the peak of inflation had passed.

Mr Folk, who is originally from Austria, said Capi started as an idea to bring an Australian approach to a segment which was dominated by large global brands such as Perrier and San Pellegrino. British giant Fever-Tree has also made strong inroads in the past few years.

"We deliberately focused on hospitality first, the restaurants and bars," Mr Folk said.

Moving into the retail channel had proved fortuitous in the early days of the COVID-19 pandemic when shutdowns hurt sales. But the solid base it had built up in the hospitality trade in the early years was an ideal springboard.

"We felt that we could spread our wings," Mr Folk said.

He said he regularly received overtures from potential buyers, but because it was a family-owned business, he wanted to keep building it for the next generation.

"You always get knocks on the door," Mr Folk said.

Beer and soft drinks giant Asahi Beverages, which owns the Carlton & United Breweries business that makes Victoria Bitter and Carlton Draught beer, acquired premium low-calorie soft drinks and mixers group StrangeLove in October, nine years after it was established.

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