Robert Downey Jr and CPG exec enter $28B coffee category with Happy

Dive Brief:

• Actor Robert Downey Jr. and Craig Dubitsky — the founder of Eos and Hello consumer products — are entering the coffee category with a new beverage company called Happy.
• Happy is introducing light, medium and dark roasts in whole bean and ground varieties, along with instant packets and Keurig K-Cups. The company said its brews feature notes of chocolate and biscotti, among others. It is also touting the traceability of the coffee beans it sources from with a QR code on its packaging.
• The growing U.S. coffee category, which is worth $28 billion, has attracted new smaller players and prompted large CPG manufacturers to bulk up their presence in the space through acquisitions.

Dive Insight:

With the backing of a famous, Oscar-nominated movie star and an innovative entrepreneur, Happy is bound to make headlines and garner attraction in a crowded field. 

Dubitsky said in an interview that his shared passion for coffee with Downey Jr. drove them to create the brand. In fact, the actor insisted on tasting an abundance of coffee blends to find the perfect flavor and even delayed Happy’s launch, which was initially scheduled for last year.

“We made sure that all of our blends had all the delicious aspects of specialty coffee,” Dubitsky said. He added that “the quality and roasting had to be perfect and able to scale.”

The coffee industry is surging, especially among younger consumers who are more likely to try out new brands and formats. According to a report published last September by the National Coffee Association, two-thirds of Americans drink coffee each day, a higher share than water. The specialty coffee market is projected to grow at a compound annual growth rate of 11.3% through 2030, according to Grand Review Research.

While Starbucks and Dunkin’ account for a large amount of sales in the coffee space, newer brands like Death and Co. and adaptogen-infused coffee lines from Four Sigmatic and Laird Superfood have found success in recent years.

The growth in coffee also has attracted the interest of large CPG companies. Nestlé has invested in its Nespresso line and purchased a 70% stake in premium coffee company Blue Bottle. J.M. Smucker — which owns Folgers and Café Bustelo along with retail-packaged Dunkin’ products — is leaning heavily into iced coffee products in a bid to win over Gen Z consumers.

Despite Downey Jr.’s star power and Dubitsky’s CPG experience, it will likely prove challenging to break through the crowded market. But Happy is prioritizing affordability and quality above other metrics, according to Dubitsky.

While Downey Jr. and Dubitsky intend to focus on coffee initially, the duo have other plans in the food and beverage space. But they are taking a cautious approach about their next move.

“I’ve watched a lot of agile and passionate entrepreneurs sometimes have eyes bigger than their stomachs, and just because you can do a lot of things doesn’t mean you should,” Dubitsky said. “We put in a lot of effort upfront and overinvested so that we can really get a better coffee experience at a better price for a lot of people.”

Dubitsky said his previous endeavors in the consumer goods space, including the creation of Eos’ lip balm spheres, helped influence Happy’s approach to packaging. The startup is placing its coffee in cube containers that are recyclable.

“People just want to touch it, it’s a haptic response,” Dubitsky said. “You want to create something from a brand perspective that can be attractive to all those senses, whether it’s touch, sight or scent.”

The new company also is aiming to connect with consumers through its marketing initiatives.

While Happy’s branding and name evoke a cheerful optimism, the co-founders also sought to draw awareness to mental health struggles. Each container of Happy coffee has a QR code that links to the website of the National Alliance on Mental Illness (NAMI), a partner of the company.

“We’d love to reinvent the relationship between entrepreneurship and philanthropy,” Dubitsky said. “We’re not jumping on any bandwagons. We’re baking it into what we’re doing.”