Bella Beverages Inc.


Bella Beverages Inc. (BB) is a Canadian company traded on the TSX Venture Exchange. BB’s business is the development, production, distribution, and sale of non- alcoholic beverages. The company produces high-quality juice beverages and soft drinks, more than half of which are sold in Canada (55%) and the rest in the United States. Most end purchasers of BB products are health-conscious individuals aged


The company was founded eight years ago by Hani Jafeer and Cindy Snin, former executives in the hospitality industry. Jafeer saw an opportunity to take advantage of the increasing consumer interest in health drinks by designing a company to focus on that niche market. He assumed the role of President and Chief Executive Officer (CEO).

Snin joined him as Chief Financial Officer (CFO) and was instrumental in effecting the operational start-up, particularly in hiring the other key executives. Together, the founders worked well as a team.

Executive Team and Organizational Structure

A summarized organizational chart for the business is provided as Exhibit 1.

Hani Jafeer is President and CEO. Before founding BB, he was Vice-President, Marketing of a large hotel chain, having worked his way up from a front-desk role through various positions in sales, restaurant management, and conference coordination. At the time of incorporation, Jafeer was driven by his initial vision to see products developed, marketed, and sold in stores. However, since the achievement of this goal, he has shown less initiative to move forward. Now 54 years old, he seems content with the current business model and does not make decisions in haste.

Reporting to him are both an executive and an administrative assistant as well as the CFO, and all of the vice-presidents.

Jafeer will be President and CEO until his planned retirement on March 31, 2013. He will continue to be Chairman of the Board thereafter. A new President and CEO will have to be found according to the specifications provided by the board of directors.

Cindy Snin has left BB to take an executive position with a hotel chain. Kerry Vance, CMA, was hired as her replacement on January 23, 2011. Reporting to the CFO are the director of Human Resources (HR), the controller, the manager of Management Information Systems (MIS), and the general (non-production) purchasing department.

Suzie Carpet is Controller. She has an undergraduate degree in biology and worked in the finance department for a large biotech company prior to coming to BB three years ago. She recently completed the CMA Professional Program. Reporting to her is the production facility’s accountant who is assisted by two analysts.

Amy Lu is Director, Human Resources. She is a 16-year veteran in the HR field, having spent the last six years with BB. She has a Certified Human Resource Professional (CHRP) designation and fairly extensive experience with unions. Her department is responsible for payroll, hiring and terminating staff, as well as union relations.

Ronald Rone is the MIS Manager. He is considered a technology expert. He earned a community college diploma in computer science and gained progressively wider experience in four different companies before joining BB a year ago. The company’s systems have been running reliably since his appointment as Manager.

Santina Marella, Vice-President (VP), Sales, has an MBA in Management. In her current role, her primary responsibility is to secure sales, which she does effectively by motivating the sales representatives to pursue orders aggressively in the retail environment. Reporting to her is the director of sales, who manages most of the day-to- day functions.

John Van Besmin, Vice-President, Marketing, holds an MBA degree majoring in Marketing from a Canadian university. He has had a great deal of experience, having worked in a variety of positions in the supermarket industry before being sought out by BB three years ago. His department’s responsibility is to drive consumer, rather than store, demand for BB product. Reporting to him is the director of marketing, who manages most of the day-to-day functions.

Claude Lemieux, Vice-President, Bottling, is an experienced beverage industry executive. Prior to joining BB, he was employed by one of the large cola bottlers in a number of senior positions. He is a mechanical engineer by profession. Reporting to Lemieux is the manager responsible for production purchasing.

As Vice-President, Distribution, J.N. Garphite is responsible for the movement of BB product from the end of the production line to a final destination. The warehouse personnel in remote locations report to him through regional distribution heads. Garphite is not in favour of outsourcing any facets of the business, having lost his job when one of his previous employers embraced this type of strategy.

The President and CEO receive an annual salary of $250,000 as well as a bonus of 2% of pre-tax income. Each VP receives $160,000 plus a bonus based on personal performance relative to objectives. This remuneration is in addition to stock option grants.

The senior management team meets weekly to discuss operational and strategic issues.

Board of Directors

BB’s board of directors consists of seven individuals and meets the independence requirements of the TSX Venture. Each director owns at least 20,000 shares of the company.

Hani Jafeer is Chairman of the Board.

Jason Lee is President of the General Canadian Insurance Company. He has been a member of the board since 2009.

Cynthia M. Boopell is Vice-President and General Counsel of Reed Paper Inc., a large pulp and paper company. She was elected to the board in 2009.

Jack Ross, formerly President and CEO of Tentail Communications Inc., a publicly traded telecommunications company, is retired. He became a member of the board in 2010.

Arturo Mindaro is President of Canada Restaurants Inc., a large, fast-food restaurant franchisor that is owned by a wealthy Canadian family. Mindaro was elected to the board in 2010.

Pierre Melançon is the founder and president of Wall Suppliers Inc., a chain of stores that sell high-end home decorating supplies. He was elected to the board in 2010.

Asha Sharma is a wealthy philanthropist and a member of one of the richest families in Ontario. She joined the board in 2011.

The board of directors meets quarterly and has formed three committees – audit, compensation, and environment. The audit committee consists of Lee, Boopell, and Sharma. The compensation committee consists of Mindaro, Ross, and Sharma. Jafeer, Melançon and Lee make up the environment committee.


BB produces and sells four brands of juice and four brands of soft drink. The proprietary recipes for these eight products were developed by researchers on contract in the company’s first year. All of the beverage names are trademarked in both Canada and the United States.

Pear Supreme™ consists primarily of concentrated pear juice, a hint of lemon juice, and other natural and artificial flavourings. Apple-Berry Special™ is a pure fruit punch, containing apple, cranberry, strawberry, and blackberry juices. Fruit Zest™ is a mixture of apple and pineapple juices. Caribbean Punch Plus™ is made from the juice of six different Caribbean fruits.

BB soft drink products are unique in the industry because they contain either real fruit juice or other natural ingredients. Mango-Plus Pop™ contains the juice of a particular type of mango, grown in a remote area of Mexico. Minnesota Spruce Beer™ is non- alcoholic and made from the outer twigs of the spruce tree, ginger root, and molasses. Limextreme™ contains a rare grade of lime juice, bought from a supplier in Mexico.

Orangola Pop™ contains frozen concentrated orange juice, known as FCOJ in the industry.

The juice and soft drink recipes are kept strictly confidential in order to prevent duplication of the beverages by a third party. Ingredients, but not amounts, are listed on the product containers. Care is taken to avoid the mistake of listing all the ingredients and proportions in any document. Only three employees have access to the full recipes, including quantities.

In the early years, BB won product innovation awards, such as the 2004 Canadian Beverage Industry Association New Product Award for Pear Supreme™ juice brand and the North American Beverage Manufacturers’ Healthy Innovation award in 2005 for Mango-Plus Pop™. In 2008, the company dropped one original product, Lemon Sour Supreme™, a soft drink that did not sell well. Currently, the company is not developing new flavours and has no department for research and development (R&D).

Most of the fruit juices and sweeteners that BB uses as raw ingredients are commodities with defined market prices. The company sweetens most of its drinks with liquid glucose/fructose. Diet versions of the soft drinks, comprising of approximately 25% of the sales volume, are sweetened with aspartame. Other important ingredients are carbon dioxide, natural flavours, sodium benzoate (to preserve freshness), and citric acid. For Mango-Plus Pop™, BB buys concentrated juice from whichever grower has the lowest price that particular season. In an effort to resolve some of their business problems, the 11 Mexican growers of that particular type of mango recently banded together to stabilize and increase the market price.

The company sells its products in plastic bottles of different sizes, ranging from 330 ml to 1 L. In total, there are 42 stock-keeping categories for the eight beverages. The bottles are manufactured by three different arm’s-length entities. In jurisdictions in which the bottles are not recyclable, BB must contribute to the government or industry blue box program. This cost is included in the standard cost of the bottle.

Five years ago, a New York firm was contracted to design the bottles. The result was a very attractive, colourful, and memorable design that has good consumer recognition, is used for every size, and…