"Hard to sustain" - When Shark Tank's Mark Cuban declined to invest in Frescos Naturales

Juan Stewart brought Frescos Naturales, his line of Latino-inspired sparkling beverages, to Shark Tank season 14 seeking $130,000 for 8% equity. The Guatemala-born entrepreneur presented six authentic flavors including Guayaba, Rosa de Jamaica, and Tamarindo.

Despite positive taste reactions and Stewart's presence in 130 King Sooper stores and 230 Ralph's locations, billionaire Mark Cuban declined to invest. After complimenting Stewart's pitch, Cuban stated:

"I hate this business because it's so hard to sustain. There's a limited amount of shelf space and all of a sudden they start asking for sliding fees or advertising or we're going to move you out to somewhere else. All of a sudden the investment needs start ramping up. I just don't like this business, so for those reasons I'm out."

In the end, Juan left the Shark Tank with Daniel Lubetzky’s offer.

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Frescos Naturales gets turned down by Mark Cuban on

Shark Tank

Stewart entered Shark Tank and explained how Frescos Naturales offers traditional Latin American fruit-based drinks in modern sparkling forms, filling a gap in the American beverage market. After distributing samples, Stewart revealed that each can contains approximately 60 calories, positioning the product between sugary sodas and flavorless sparkling waters.

Stewart shared his background growing up in Guatemala where these drinks were common household staples. The business idea came from his son, who in 2018 suggested bottling his father's homemade Rosa de Jamaica recipe. Manufacturing costs stood at 88 cents per can, with wholesale pricing at $2.10.

Some retailers sold the product for as high as $4.50, though Stewart aimed to bring the retail price down to $2.99 to compete with similar beverages selling for $3.99. In 2021, Frescos Naturales generated $182,000 in revenue. By mid-2022, sales had reached $100,000, with projections of $330,000-$350,000 for the full year. Looking ahead to 2023, Stewart forecasted reaching $850,000 in sales.

While the other Shark Tank investors contemplated their decisions, Mark Cuban quickly identified his concerns with the business model itself rather than Stewart's execution or product quality. Cuban elaborated on the specific challenges beverage companies face in retail environments before declining to invest.

After Cuban's rejection, other sharks followed with their own concerns. Daymond John stated he would need to learn too much about the product before using it, suggesting its complexity was a barrier. Kevin O'Leary acknowledged the strength of Stewart's niche but still declined to invest. Lori Greiner similarly cited the challenging and competitive market as her reason for stepping away.

Daniel Lubetzky, a guest Shark Tank investor, expressed admiration for Stewart's energy and determination, particularly after hearing about the entrepreneur's perseverance through his son's cancer battle.

Seeing potential but wanting to spread the risk, Lubetzky suggested he would invest if another shark joined him. This prompted Kevin O'Leary to reconsider, and together they offered $130,000 for 30% equity, 15% for each shark.

Stewart countered with 25% equity if Daniel would provide inventory financing. Lubetzky considered this proposal but ultimately could not guarantee the financing terms Stewart wanted. Stewart accepted a modified deal: $130,000 for 25% equity with Lubetzky as the sole investing shark. O'Leary withdrew from the partnership during these final negotiations.

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Post tank journey

Following the airing of this Shark Tank episode, Frescos Naturales experienced an immediate surge in website traffic that temporarily crashed their server. As per Shark Tank Blog, the deal with Daniel Lubetzky had not closed and likely would not be finalized, but the company maintained momentum in the market.

Frescos Naturales successfully kept its placement in both King Soopers and Ralph's locations while working toward expanding distribution channels. The company reached its projected annual revenue of $850,000 as Stewart had forecasted during his pitch, building the estimated company net worth to $520,000.

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Shark Tank season 16 is airing on ABC network.