Dive Brief:
- Flow Alkaline Spring Water closed a $45 million funding round with many famous investors, BevNet reported. The funds will go toward scaling production and distribution, and doubling the company’s consumer base next year.
- The star-studded investors in this round include singer Post Malone, former baseball player Chase Utley, singer Shawn Mendes and his manager Andrew Gertler, and artist managers Austin Rosen and Dave Holmes. Private equity firm Ruttenberg Gordon Investments also participated in the funding round.
- Flow founder and CEO Nicholas Reichenbach told BevNet that the brand is aiming to sell more than 100 million units this year and has seen 250% year-over-year growth. It’s sold in 25,000 stores globally, and the brand is hoping to have a consumer base of 20 million by 2021.
Dive Insight:
As functional foods and beverages continue to become more popular with consumers, companies that can deliver that function — especially in today's world — can go far. Flow fits neatly into many trendy boxes.
While the health benefits of alkaline water are debatable, devotees say its higher pH has many benefits, including reducing acid in the blood, improving metabolism and maintaining energy. One of the ways Flow says it differentiates itself from the competition is by finding mineral-rich and naturally alkaline water directly from a spring. Its water, with a pH of 8.1, contains magnesium, calcium, bicarbonate and potassium.
But Flow has more than its natural water in its favor. Its product is sold in a paper carton with a plant-based cap. The cartons are 100% recyclable and made from more than two-thirds renewable materials, giving it sustainability credentials. And Flow is a Certified B Corp, meaning it exhibits high standards of corporate responsibility.
Flow has already been working toward rapid expansion. The company is based in Canada, but it does the bulk of its business in the U.S. In August, Flow opened a spring in rural Virginia, as well as a bottling facility in the nearby town of Verona, Virginia. This was the company's first facility in the United States, and Reichenbach told BevNet that some of the money in this latest financing round will be used to further expand this 115,000-square-foot plant.
The company has seen its sales soar during the pandemic, telling BevNet that retail sales are up 25% and e-commerce sales jumped 50%. Flow's e-commerce model jibes well with the current feeling of today's society, where millions are staying at home. The company has a subscription service, in which consumers can buy cases of different flavors of Flow water to be delivered on a regular basis. The company told BevNet that it hopes to increase the number of consumers taking advantage of this service, and fine tune the level of customer service and support they need. Analysts have said that if a brand can deliver superior service through a novel distribution channel now, it will be more likely to retain that business when society returns to normal.
Flow also has more trendy products on deck. The company acquired BOONS Collagen Water in February, and plans to release three flavors of collagen-infused alkaline water this month. Collagen is a hot functional ingredient nowadays, with many consumers believing it can improve skin elasticity, reduce signs of aging and eliminate joint pain. With the global collagen market growing quickly — Grand View Research projects it will reach $6.6 billion by 2025 with an annual growth rate of 6.5% — this investment could pay off.
The only question mark in Flow's immediate future comes from its position as a premium product. With the economy plunging toward recession and record unemployment figures, many consumers will be looking to stretch their budgets as far as possible for the foreseeable future. A survey of food and beverage industry leaders by innovation lab Mattson found almost half think good value will be the top trend as the pandemic abates. Whether consumers will turn away from alkaline water and back toward what comes from their taps remains to be seen. However, it may make sense for Flow to use some of these new funds to keep prices low so cash-strapped consumers will not see it as an indulgence.
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May 05, 2020 at 09:52PM
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Flow Alkaline Spring Water raises $45M - Food Dive
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