Cleveland Hustles: The Hustle Continues

These entrepreneurs hope craft soda will be the next big thing in beverages

When it comes to global soft drinks, two companies rule the roost: Coca-Cola and PepsiCo.

But that doesn't mean there isn't room for smaller brands to sneak in and steal some of the profits, especially at the local level. And that's exactly what Sean Adkins and Mike Gulley of Cleveland-based Old City Soda are hoping to do with their hand-crafted, all-natural sodas, which come in flavors like cinnamon and hibiscus.

Looking for a healthy injection of funds to take their business to the next level, the founders recently pitched their products to Kumar Arora, an investor on CNBC's reality business show "Cleveland Hustles."

Old City Soda makes hand-crafted, preservative-free sodas in Cleveland.
CNBC
Old City Soda makes hand-crafted, preservative-free sodas in Cleveland.

The show focuses on revitalizing the economically struggling Gordon Square neighborhood of Cleveland. Adkins and Gulley wanted an investment of $175,000 in return for 25 percent equity in their company.

Old City Soda began a little over five years ago in Gulley's apartment. Though he and Adkins have enjoyed steady growth, they still can't quite make it over the hump to be a truly profitable business. Their vision is to expand the brand into a full retail café while also ramping up production and national distribution.

"We want to change the face of the soda industry, one consumer at a time," Adkins said.

Leading up to the show, Old City Soda was spending between $0.55 and $0.65 per unit. Wholesale for one bottle was $1.50. With weekly sales averaging nearly $3,000 and a 60% profit margin, the company was netting a little more than $1,700 a week.

To see how their product would perform in real time, Arora challenged them to open a one-day pop-up store within 72 hours. Their goal was to make $1,000 through combined daytime and evening sales. The catch was that they had to cater to kids and families from 2 p.m. to 5 p.m., and an older crowd after 7 p.m.

This was all about finding their target audience. Would the soda drinks be a bigger hit for kids as ice cream floats, or adults as cocktails?

Old City Soda co-owner Mike Gulley serves a bottle to ‘Cleveland Hustles’ investor Kumar Arora.
CNBC
Old City Soda co-owner Mike Gulley serves a bottle to ‘Cleveland Hustles’ investor Kumar Arora.

The pop-up had mixed results.

While the kids thoroughly enjoyed their floats, total sales fell short of the daytime goal of $300. However, when they turned Old City Soda into a bar at night, they crushed their target sales, bringing in almost $1,000.

Ultimately, Arora decided to invest in the company. And as a marketing guru, his plan is to use his expertise to take Old City Soda to the next level.

Time will tell if a soda shop can survive in Gordon Square and be seen as more than a novelty.