Editor's note: This article is part of Inc.'s 2015 Best Industries report.
For Max Baumann of Malibu, California, 2009 was the Year of Avid Googling. Which led to 2010's being the Year of Sipping Experimental Concoctions.
"I was absolutely fascinated by researching on Google all of the herbs and amino acids and minerals that could calm you down," Baumann, 26, says. "I came up with over 50 ingredients, and we tried hundreds of samples. Hundreds." The goal was creating a "tropical" flavored beverage with a "medium" calorie profile that would help its imbiber relax without getting sleepy and focus without the assistance of caffeine.
Baumann partnered with Van Nuys, California-based Power Brands to prepare the many samples. He soon found that some of his Googled additives made the beverage taste skunky. Some made it foggy. Others were simply not as healthy as they appeared. But one stood out: the dopamine-boosting amino acid from green tea, L-theanine. It almost lacks a taste--but has a pleasant aftertaste known as umami.
And with that discovery, Baumann knew his idea might just work. He teamed up with three University of California-Santa Barbara classmates, Caleb Davidge, Mitchell Raisch, and Russell Fager, to incorporate the Chill Group and produce an all-natural beverage aimed at calming nerves. They branded it Just Chill.
Today, Just Chill is available in three lightly carbonated flavors in stores throughout the western United States. The Chill Group works with major distributors such as Haralambos, and has become a pioneer in the fast-growing industry known as "relaxation beverages."
Yes, relaxation. It's a slice of the always-expanding beverage industry that has developed in part from a backlash against the proliferation of the Red Bulls and Monster energy drinks of the world. Zen-seeking consumers have responded positively to the novelty of beverages created from additives like tea extracts, kava, and melatonin. As a result, relaxation beverage revenue is up nearly 30 percent year-over-year for the past five years, bringing in $153 million in 2014. Growth is expected to continue at roughly 12 percent a year for at least the next four years, according to research firm IBISWorld. (Another growth driver: 70 million Americans report having trouble sleeping, according to findings by the National Health Institute.)
SupermarketGuru's Phil Lempert, a food-marketing expert, says that Red Bull and other energy drinks have successfully introduced customers to the concept of boosting their energy level with a canned beverage--but not necessarily with caffeine. But as of this year, he says, "I've never seen a world more nervous or anxious about everything that's going on." Perhaps, he says, just as Baby Boomers may take to valium or herbal tea and Gen Xers may turn to a microbrew, younger folks might just start to reach for melatonin or kava. "This is coming out of a need to relax, and a more sophisticated way to relax than with a martini or drug."
Today, Just Chill is made with Suntheanine, a patented form of the green-tea component it originally contained, along with lemongrass, magnesium, zinc, and vitamins B and C. Together, Just Chill's tagline promises, these ingredients unleash "the power of calm." According to Baumann, the company's branding is focused on "how you are your best self when you are calm and focused. That's really what we are going for--learning how to incorporate different things in your life that help you become more chill."
Mellow vibes, bright future.
It was back in 2008--Baumann's Year of Surfing Instead of Studying--when the idea for Just Chill struck him. He was at Los Angeles International Airport en route to a surfing-centered vacation in Australia when the frantic pace of his fellow travelers began to, well, harsh his mellow. "Everyone was so insanely stressed and rushing around," he says. "It made sense when I saw what was in their hands--large coffees and energy drinks. I thought: Wouldn't it be better to drink something that would calm you down while keeping you focused?"
It took Baumann and his partners some time to persuade friends and family to invest approximately $200,000 in their vision. But once they got rolling, it didn't take long to go from hawking the drink out of the back of vans and taco stands in Santa Barbara to distributing it to grocery stores and shops such as Whole Foods and Von's up the West Coast.
The future could be extremely bright and very chill for companies like the Chill Group, says Lempert, the food-and-beverage marketing pro. Not only is starting a company in the beverage industry highly profitable for even scrappy upstart companies, he says; it also has tremendous upside. "Let's not forget about the elephants in the room, Coke and Pepsi, which are struggling, and are looking to branch into new markets and healthier beverages." VitaminWater, for example, was acquired by Coca-Cola in 2007 for a remarkable $4.2 billion in cash. And despite the estimated 450 different relaxation beverages on offer, experts say the market is not yet saturated. According to IBISWorld, the Chill Group has a roughly 30 percent market share, followed by the Marley Beverage Company (makers of a tea-and-botanical beverage, with 22 percent) and Dream Products (which offers a melatonin-enriched "sleep and relaxation" shot, with 12 percent).
Still, the Chill Group is facing a list of challenges going forward even beyond those 450 competitors. Baumann says his biggest problem is the same today as it was when he and his colleagues started: exposure. "It's hard to get people to even pick it up in a store instead of a bottled tea, because people are so fixed in their habits," he says. "Disrupting that cycle and breaking their habits isn't easy."
His team of 11 employees is trying to overcome that difficulty, though not through conventional national advertising campaigns. Instead, they target individuals they've deemed "influencers" on social media, and message them, or send them cases of Just Chill to sample. (Baumann says reaching out to celebrities with whom there's some social connection is highly effective, though outreach to cold-contacts is still productive: Out of 100 cases sent, about 20 people will respond, and roughly five will respond publicly in a positive way on social media.) The Chill Group must also concern itself with the whims of regulators--particularly the Food and Drug Administration, which can effectively shut down production should a company include unapproved ingredients or break other rules.
These issues have led to one other challenge for the surf bros of Just Chill: how to truly live and breathe the mindset their company advertises on its cans. Baumann admits both to getting stressed out occasionally when plotting out the company's future growth and to continuing to consume caffeine (though mostly in the form of green tea rather than harsh coffee). "Our whole nation is still too wired on caffeine," he says with a sigh. "It can be conflicting to our own company philosophy when there are stresses. That's something we're working on."