On March 11, a fizzy startup received $67 million at a $1.4 billion value and projected $263 million in revenues by 2023. Did you guess that this startup is Liquid Death, a canned water manufacturer?
Despite being in a niche industry that few investors are interested in, Liquid Death has raised more than $267 million in venture capital. Beverage is a difficult business for VCs since it is capital intensive, requires a flair for selecting companies that will sell effectively on retail shelves or other direct-to-consumer means, and encourages repeat customers rather than one-time purchases.
Michael Jones, managing director of Science Ventures, told the sources that his firm was not interested in getting involved in the beverage industry, but backed Liquid Death because of its potential to threaten established companies such as Pepsi and Coke. “We were in the market for culturally relevant companies with better-for-you products that redefined a tired and old category,” Jones told the conference. His investment team viewed Liquid Death as “a super disruptive brand.”
Some of the new venture-backed beverage businesses hope to disrupt the industry by introducing new drink categories. This is similar to what technology businesses frequently do, according to Dan Buckstaff, chief marketing officer at retailer data company Spins.
“You may think you can’t squeeze another category in here, but instead you approach it differently,” Buckstaff went on to say. “You take inspiration from others or maybe there’s a new technology that allows you to do it, or data, that does lead to companies that can create hundreds of millions in ARR.”
He explained that Liquid Death drew on beer marketing and shelf positioning to achieve success not only on grocery store shelves, but also at events, clubs, restaurants, and even conferences. Liquid Death could not be reached for comment at press time. In fact, when attending the consumer packaged goods conference Expo West recently, Buckstaff had a Liquid Death party, and his room looked like “we had a real binge.”
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