The brothers started in their mother's kitchen in a town most people can't find on a map. Now they're staring down PepsiCo.
Cove Soda, a Halifax-based beverage company that began life brewing kombucha at farmers' markets in rural Nova Scotia, pulled in $15 million in Series A funding on November 4—a war chest it will need as it wades into one of the most frenzied corners of the consumer packaged goods universe. Vanterra Ventures led the round, with backing from RiverPark Ventures, Palm Tree Crew, and Simple Food Ventures. The investor roster reads like a VIP bottle service list: DJ and producer Diplo, actor Miles Teller, the electronic duo The Chainsmokers, Fanatics CEO Michael Rubin, and a handful of NHL and MLB players including Jack Eichel, Aaron Ekblad, Matt Chapman, and JD Martinez.
For a company that only pivoted to functional sodas in early 2023, Cove's retail penetration is striking. Over 7,000 doors now carry its zero-sugar, probiotic-spiked sodas—Costco, Target, Whole Foods Market, Sprouts, Amazon. That kind of velocity doesn't happen by accident, particularly in a category where shelf space has become something of a blood sport.
The Geography of Growth
Consider the timeline. In February 2024, Cove landed in 140 The Fresh Market locations. By April 1, it had rolled into 530 Costco warehouses nationwide. Then, this past September, the company locked in what might be its most strategic move yet: an exclusive national distribution partnership with Keurig Dr Pepper Canada. That deal hands Cove access to KDP's sprawling sales infrastructure and omni-channel marketing apparatus across its home turf—no small advantage when you're trying to punch above your weight class.
The Series A capital will bankroll further North American expansion, new flavor R&D, and what founders John and Ryan MacLellan describe as "key hires." (Translation: they need grown-ups who've scaled brands before.) Ellis Fried, a principal at Vanterra Ventures, is joining Cove's board as part of the arrangement.
Big Money, Bigger Appetites
To understand why Cove needed $15 million—and why it likely won't be enough—you have to understand just how heated this market has become.
Olipop, the prebiotic soda darling, raised $50 million at a $1.85 billion valuation in February, powered by 2024 sales that topped $400 million. PepsiCo, evidently unwilling to cede ground, acquired rival Poppi for $1.95 billion just weeks later in March. Coca-Cola launched its own Simply-branded prebiotic sodas earlier this year. Bloom Nutrition, the influencer-beloved supplement brand, pushed Bloom Pop into more than 3,000 Walmarts.
The majors have noticed. And when giants notice, they either buy or crush.
Cove is betting it can carve out a niche by zigging where others zag. While Olipop and Poppi lean hard into prebiotics (essentially, fiber that feeds your gut bacteria), Cove emphasizes probiotics—live bacteria, 1 billion colony-forming units per can—alongside certified organic ingredients and zero sugar. The flavor lineup skews nostalgic: Classic Cola, Root Beer, Dr. Cove, Ice Pop, Cream Soda. Retail listings also tout "high source of Vitamin C," though whether consumers parse the difference between pre- and probiotics remains an open question.
The Kombucha Prologue
The MacLellan brothers didn't start here. They launched Cove Drinks in 2016, brewing kombucha in their mother's kitchen in Malignant Cove, Nova Scotia—yes, that's the actual name of the town—and hawking bottles at local farmers' markets. It was the kind of bootstrap origin story VCs claim to love but rarely fund.
They did eventually. Canaccord Genuity Wealth Management led a $1.2 million seed round in 2019, followed by $4.5 million more in 2021. By the time Cove pivoted to functional sodas in 2023, the brothers had raised roughly $5.7 million for the kombucha business. Not enormous, but enough to prove they could build distribution and survive.
The shift to soda, though—that's what unlocked velocity. Within 18 months, Cove leapt from regional Canadian shelves to major U.S. chains, then secured the KDP Canada deal and closed this Series A in quick succession. Perhaps the brothers realized what many beverage founders eventually do: kombucha is a tough sell outside coastal metro areas, but everyone understands soda.
The Scrutiny Ahead
Still, scaling in this category carries risk beyond the usual startup perils. Consumer skepticism around functional beverage health claims has sharpened. Poppi settled an $8.9 million class-action lawsuit in 2024 over allegations it misled customers about gut health benefits, though the company denied wrongdoing. (It paid anyway.) Regulators and class-action attorneys are paying attention now.
Cove will need to navigate those shoals while competing against brands with exponentially larger marketing budgets and distribution muscle. The KDP Canada partnership helps on one side of the border. The other side? That's where the $15 million comes in—and where the MacLellans will find out whether a probiotic pitch and nostalgic flavors are enough to hold ground when PepsiCo and Coca-Cola are circling.
For now, the brothers from Malignant Cove have a seat at the table. Keeping it is another matter entirely.
