4 Innovative Beverage Startups That Will Disrupt the Industry in 2021
While Coca Cola and Pepsi still dominate the beverage landscape, their market share stronghold hasn’t prevented creative entrepreneurs from launching innovative products that differentiate themselves from these incumbents. Today, consumers aren’t willing to accept the status quo when it comes to the beverages they purchase. With the explosion of social media and e-commerce, beverage startups can now circumvent many industry gatekeepers that historically inhibited early-stage innovations. Despite this emergence of startup activity, legacy beverage portfolios have been slow to adapt to this new reality, leaving them vulnerable in the next decade.
Below, we analyze four notable beverage startups that will disrupt the industry in 2021 and beyond.
The Story: Who would have thought that an “ugly” drink could be popular? “Ugly” actually stands for “The Ugly Truth,” and co-founders Hugh Thomas and Joe Benn started the company after becoming fed up with the lack of authenticity shown by beverage brands. The London-based startup offers a line of “better for you” sparkling waters that are naturally flavored and contain no sugar, no sweeteners, no calories and nothing artificial. The company’s branding is designed to appeal to its target audience of Millennials, who are interested in cleaner labels and transparent messaging. This has allowed the brand to break into a crowded market with a unique positioning aimed at young, digitally native consumers, according to Thomas. Ugly Drinks is also dedicated to tackling the “ugly truth” of global gender inequality, donating one cent from every can sold to its partner Girl Up, a United Nations Foundation charity.
The Incumbents: PepsiCo, The Coca-Cola Company, Nestle and Danone
Why Incumbents Should Be Worried: Ugly Drinks launched in the United States in mid-2018 and raised an undisclosed round of funding at the end of following year. The company has used that additional capital to support the rollout of its new line of caffeinated sparkling waters and monthly limited-edition flavors available through its direct-to-consumer website, along with the expansion of its sales and marketing infrastructure in the United States and Europe. Thomas said Ugly Drinks will be learning from its investors as the brand expands into new places, markets and categories.
What Big Beverage Should Learn: Social media is more than a marketing tool to sell more beverages. Since its launch, Ugly Drinks has used social media as a way to build close, one-on-one relationships with its customers. This provides a consistent feedback loop that allows the brand to quickly implement consumers’ requested changes, such as improvements to its delivery service and tweaks to its flavors.
Other Startups To Watch: Liquid Death, Sanzo, Just Water, Blk. and Dirty Lemon
Category: Energy Drinks
The Story: While most new CPG brands are started because of an entrepreneur’s burning desire to fulfill a market need, CLEAN Cause is about saving lives…starting with that of its founder. After a handful of rehab attempts and two decades of addiction, Wes Hurt finally got sober and found recovery in 2014. Shortly thereafter, he founded CLEAN Cause with the purpose of helping others who were on their journey to recovery. In fact, 50 percent of CLEAN Cause’s profits support recovery from alcohol and drug addiction. To date, the company has granted almost 2,000 sober living scholarships, representing over $900,000.
The Incumbents: Red Bull, Monster Energy, The Coca-Cola Company and PepsiCo
Why Incumbents Should Be Worried: CLEAN Cause is currently available in more than 6,000 retail locations nationwide and raised $7 million in funding from private investors in late 2019. The company also hired 20-year Red Bull veteran Chad Peffer to be President and Chief Commercial Officer. Additionally, CLEAN Cause originally only funded sober living programs in Austin, Texas, but it now offers scholarships in all its markets as part of its “We Give Where You Swig” campaign. Wes believes that consumers will be more inclined to support the brand’s cause if they know their money is going back into their local communities.
What Big Beverage Should Learn: CLEAN Cause has shown that today’s energy drink brands don’t need to rely on the extreme sports market in order to succeed. Traditionally, leading brands have focused their marketing messages on how their energy drinks can improve consumers’ physical performance. By putting its focus on giving back to the community, CLEAN Cause has shown that energy drinks can be so much more.
Other Startups To Watch: Kill Cliff, LIFEAID Beverage Co., MATI, MatchaBar and Runa
The Story: Can wine and fitness work together? That’s the question the three founders of FitVine set out to answer by developing a “clean wine” for consumers living active lifestyles. Since wine (in moderation) is usually considered “heart healthy” because of its antioxidants, the founders knew they needed to dig deeper into what would really differentiate FitVine as a healthier wine. According to founder Mark Warren, “The more we dug, the scarier it got.” They soon realized government regulations allowed for unlabeled harmful chemicals and pesticides in wine. Additionally, the sugar content in most wine is generally higher than the active consumer would be interested in consuming regularly. With this information, the founders set out to create a great-tasting wine (taste is still the most important purchase criteria in beverages) that uses the best pesticide-free grapes and has low sugar content.
The Incumbents: AB InBev, Molson-Coors, E&J Gallo and Constellation Brands
Why Incumbents Should Be Worried: FitVine initially “spun its wheels” a bit trying to sell its wine to distribution gatekeepers in the alcoholic beverage industry. That lack of early success didn’t stop the company, as it pivoted to non-traditional sales and marketing routes, such as yoga studios and fun runs. This eventually led FitVine to become the official wine of IronMan events. The brand is now “off to the races” with an expanded product portfolio and refreshed look, which has helped it get into major retailers such as Whole Foods and Total Wine & More.
What Big Beverage Should Learn: Don’t try to appeal to everyone, because in today’s fragmented CPG market, you’ll end up appealing to no one. As consumers increasingly seek out more personalized offerings, they stumble upon emerging brands that are better aligned with their specific needs. This slowly erodes the market share of leading incumbents, which can result in “a death by a thousand cuts.” While targeting your value proposition can create a natural ceiling, it also allows your brand to develop more meaningful customer relationships that go beyond simple transactions.
Other Startups To Watch: Haus, Dry Farm Wines, Sweetdram, Boochcraft and Sufferfest Beer Co.
Category: RTD Functional Beverage
The Story: REBBL is a plant-based functional beverage company that was born from the non-profit Not For Sale, which works to eradicate modern-day slavery around the world. The native ingredients in REBBL’s beverages are grown in regions that need economic empowerment, helping create sustainable livelihoods and reduce the risk of human trafficking and exploitation. REBBL, which stands for “roots, extracts, bark, berries and leaves,” offers a line of coconut milk-based drinks that contain “super herbs” such as maca and ashwagandha. According to REBBL, these super herbs work in complex ways to benefit the human body and have a long history of traditional use in many cultures. Over the past few years, REBBL has launched several new on-trend products, including a Matcha Latte elixir, a Maca Cold Brew Coffee elixir, and a line of sparkling prebiotic tonics.
The Incumbents: PepsiCo, Keurig Dr. Pepper, BellRing Brands and Glanbia
Why Incumbents Should Be Worried: Led by consumer investment firm CAVU, REBBL secured $20 million in 2018 to fund its impressive revenue growth trajectory. The company is now led by Michele Kessler, former CEO of protein bar company Think! (formerly known as ThinkThin), which will further strengthen the brand’s position in the functional beverage market. Additionally, REBBL is now a certified Benefit Corporation (B-Corp) and is the first company of its size to convert 100 percent of its packaging to post-consumer recycled bottles.
What Big Beverage Should Learn: Even nascent beverage categories aren’t safe from new forms of disruption. While adding functional ingredients used to be enough to win over consumers from conventional beverages, the ready-to-drink functional beverage market has reached a new level of maturity that allows brands with more targeted propositions to attract aligned subsets of consumers. A great product alone is no longer the sole deciding factor for success in the beverage industry. Brands also must be able to galvanize consumers around a deeper, more authentic story.
Other Startups To Watch: OLIPOP, Recess, Better Booch, Koia and OWYN
OneSpace Can Help
Today, the idea that “eye level is buy level” is just as relevant online as it is offline. With more and more beverage startups entering the market, it has become increasingly difficult for incumbent brands to maintain prime placement on the digital shelf. OneSpace’s suite of tools and services helps CPG brands centralize, optimize and publish product content that wins top position in search results on multiple online retailers. Contact us to learn more.