How to Win in Business

Why 'Shark Tank' investors Daymond John and Kevin O'Leary got in a bidding war over wine for cats

Brandon Zavala pitching his wine for pets on "Shark Tank."
Photo by Michael Desmond

Hit reality show "Shark Tank" proves there is no idea too crazy to build a business with.

On the latest episode which aired on Friday, investors Daymond John and Kevin O'Leary got into a bidding war over the chance to invest in a business that makes wine for your pet.

Yes: Wine for your cat and dog.

Brandon Zavala, the founder of Apollo Peak, was looking for a $100,000 investment in exchange for 10 percent equity. Prior to launching Apollo Peak, Zavala was a sales rep for a pet food company and discovered an unfilled niche in the pet beverage space.

The wines — with clever names like MosCATo, Pinot MEOW and CharDOGnay — have no alcohol or any grape juice. They are brewed with natural herbs like chamomile. The red drinks have beet juice for color. The wines for cats contain catnip, which makes them extra social, explained Zavala.

In the three months prior to pitching on the show, Zavala reports selling $192,000 worth of the pet wine. Shark Robert Herjavec was impressed. "In a million years, I never would have thought that!"

In 2017, Zavala expects to do between $1.2 and $1.5 million in sales. The pet wine costs $11.95 for an eight ounce bottle at retail and Zavala says he can make a bottle for $1.25.

Kevin O'Leary, who has an online wine business, says 97 percent of wine in America is sold for under $12.99. But previous experience in working as a manager of pet food brand also taught O'Leary that pet owners are willing to spend money on whatever makes their fur balls purr.

"I learned something about the cat food business. Cats are so finicky, they are so difficult to actually get into a routine," said O'Leary. "And once they cling on to a flavor or a brand, they don't change. If you ship the product to five families with cats and three of them or two of them make it part of the cat's diet, they will start buying cases. I have been there in that business. That is a gold mine."

O'Leary offered Zavala $100,000 for a third of his company. Daymond John, the entrepreneur who grew hip-hop clothing line FUBU into a $6 billion brand, offered Zavala $100,000 for 25 percent equity.

John mentioned that with his expertise with retail, he could help Zavala grow the business. "I do understand scaling. You want to grow a mountain, you know what a pile of kittens are called? A MEOWtain."

Zavala, looking to keep a larger percentage of his company, then had the two sharks compete against each other. Both O'Leary and John offer $100,000 investment for 20 percent stake in the company.

Ultimately, it was O'Leary who won over Zavala with his proposition to market the pet wine to his existing network of wine drinking customers online. "Here's what I am thinking," says O'Leary. "I am shipping to hundreds of thousands of people who know my wine right now. What percentage of them have cats. It's a huge advantage."

Zavala was surprised that he got more than one shark interested in his far-out business idea.

"Honestly I can't believe that I got multiple offers," said Zavala. "I was not thinking that any offers would really come out of this. I am really excited to get a deal. Absolutely excited. I think this is going to help us grow and we are going to become nationally and globally recognized."

O'Leary himself was tickled at the oddity of the business. "That's what I love about Shark Tank. Who could even think this. I love it!"

But even as John and O'Leary battled over the opportunity to invest in a wine business for cats, the biggest shark in the tank was not taking the bait.

"I believe every word you have said but there is just no way on god's green earth I am going to be in the cat wine business," says Mark Cuban, the billionaire tech investor and owner of the Dallas Mavericks. "I am just not built for this business."

See also:

When 27 banks rejected Daymond John, his mother's advice saved him

5 secrets of success from 'Shark Tank' investor Daymond John

Right as 'Shark Tank' investor Daymond John became really rich, he lost everything

'Shark Tank' investor Daymond John reveals the book he's read 20 times

Daymond John's 5 ingredients to living a successful life
Daymond John's 5 ingredients to living a successful life

Disclaimer: CNBC owns the exclusive off-network cable rights to "Shark Tank."