Hughes knew that in the modern American market, the mere suggestion of a functional beverage was enough to sell product. As an undergraduate at Vanderbilt, he had met the son of Tom Schwalm, who had co-founded what would become SoBe beverages in 1995. SoBe had tweaked the healthful-noncarbonated-beverage concept by marketing an iced tea infused with herbs, and had designed its packaging to communicate a vague aura of energizing healthfulness. Two years after it appeared on the shelf, analysts were estimating annual sales at about $65 million.
SoBe, Snapple, and AriZona Iced Tea all rode the first wave of non-cola-beverage sales, and Vitaminwater’s launch in 2000 pushed the trend to its logical extreme: not soda, not juice, not tea—just water. But good for you! Anyone who cared to read a Vitaminwater label could see that most flavors contain about 32 grams of sugar per twenty-ounce bottle—only seven grams less than a twelve-ounce can of Coke, and the maximum daily limit of added sugar recommended by the government in the 2005 Dietary Guidelines. But as Gerry Khermouch, editor of Beverage Business Insights, points out, Vitaminwater perfected the art of guilt-assuagement. “They’re indulging the consumer’s sweet tooth, and offering them psychological cover for drinking sugar water.”
The instant success of Vitaminwater created an opportunity for anyone hoping to market a healthy-looking drink. But Hughes didn’t approach his product cynically. In 1994, Congress had demanded that the FDA relax its standards for regulating dietary supplements, some of which might enhance body functions and mitigate health problems. Hughes studied scientific papers online while on call at the UCLA hospital, and he paid attention when doctors recommended soy phosphatidylserine as a brain booster to fight dementia, or spoke about how the amino acid N-acetylcysteine could protect the kidney and liver from damage. On his off hours, he would mix N-acetylcysteine with other natural additives like prickly-pear extract, which has been said to reduce hangover symptoms, in an effort to create the first truly effective morning-after drink.
“I just started messing around in the kitchen–slash–lab–slash–meth lab,” he says. He made syrups and emulsions, trying to find a way to keep the N-acetylcysteine from oxidizing. He’d be up late at night cooking and leave the kitchen cluttered with beakers and pans caked with melted sugar. Once, the mixture fermented and a pair of bottles exploded, burying glass shards in the walls.
By 2004, Hughes had developed Urban Detox, and early the next year he and his partners found a factory in Los Angeles to make 5,000 cases. At first, they sold from an old orange van with HUNGOVER? painted on the side. The brand grew quickly over the course of Hughes’s surgical residency. By the end of 2005, when Function sold $400,000 worth of drinks, they traded the van for contracts with distributors. In 2006, Function raised more money, and revenues leaped to $5 million. Last year’s sales reached $10 million, and that figure is expected to double this year.
Function’s growth trajectory is similar to that of other drinks in the sector, but the company is still tiny. Industry insiders say Function’s most likely endgame will be to sell the brand to one of the beverage giants. “But the deciding factor,” said Barry Nathanson, publisher of Beverage Spectrum, “is going to be if they can get the message through that Function, in fact, really functions.”
Earlier this summer, I visited Function’s Ikea-furnished office. It’s just south of LAX, minutes from a beach where the company keeps a couple of struggling actors on hire to hand out free drinks. Function has a full-time staff of about 50, but there’s usually only seven or so in the building. Simon and Dayton Miller, who became Function’s CEO, often arrive at 6 a.m., and Hughes, when in Los Angeles, would play catch-up in the afternoon after completing his obligations at the hospital. When I arrive, Hughes has been held up in the operating room. He stumbles in at about 4 p.m. in green scrubs, with a change of clothes in one hand, a laptop bag stuffed with scientific papers in the other, and a phone propped between his right shoulder and head.
The afternoon schedule calls for a meeting to test a new drink Hughes has been developing. In addition to Urban Detox and Light Weight, the company’s suite of products already includes Brainiac (red, claims to boost memory and promote mental acuity), Shock Sports (yellow, claims to help “ease sore muscles”), Night Life (peach, claims to help “promote sexual health”), Alternative Energy (a lighter yellow, claims to help “provide elevation of mood and energy”), Vacation (opaque white, claims to help “improve your mood and reduce stress”), and House Call (a translucent tan, claims to “help boost your immune system and fight colds”). It’s important to have enough functionalities to appeal to a range of people—and enough colors to fill a shelf—so Function always has at least three flavors in the final stages of development.