Waterdrop: The micro-drink brand reinventing the way people drink water lands in the U.S. and gets a $70 million funding round

Freeze-dried botanical extracts arrive in America in handy pocket size to mix with water, to drink more, and cut down on plastic consumption

Micro-drinks are aimed at Gen Z and Millennials, who are committed to mindful consumption and a healthy lifestyle, steadily increasing in the U.S. market

Waterdrop, the company that designed the world's first micro-drink, has closed a US$70 million Series B financing round to further accelerate its global expansion and continued investment in research and development. The funding round was led by Temasek, a global investment firm specializing in sustainability, whose net portfolio value is $283 billion. Other investors included Bitburger Ventures and Founders Future.

The Austrian brand was founded in 2016 by Martin Murray and his brother Henry and Christoph Hermann to overcome the hydration challenge and revolutionize the conventional way of drinking water. How? Thanks to low-calorie freeze-dried cubes formulated with botanical extracts that dissolve in water (cold or hot) and flavor it, to encourage increased daily water consumption and decreases consumption of carbonated and sugary drinks. The packaging is recycled and sustainable, and the small size that can be conveniently carried in a purse, fanny pack, or even in a pocket allows for a tasty drink in seconds, anywhere, anytime. The product has been formulated without added gluten, lactose, sugar, and no preservatives or artificial flavors.

Waterdrop creates tasty mixes of fruits and plants, selected based on their healthy functional properties for each client's need

A supply of hydration in a convenient pocket size with high-quality fruit and plant extracts from around the world, such as açaí from Brazil, ginseng from Asia,  moringa from India, and baobab from Africa, to name a few. Each package contains 12 micro-drink cubes, 12 flavors to dissolve in cold water, and six micro-teas for hot infusions. The varieties are matched according to the active ingredients they contain, which are capable of promoting certain physiological functions that can benefit the consumer's health. For example, Focus, which includes vitamins C, B1, and B5, plus lime, acerola, and green coffee, to aid concentration;  Glow, with vitamins B1, E, and C, mango, cactus fruit, and artichoke for skin wellness; and boost, with vitamins B6, B12, and C, plus black currant, elderflower, and açaí, to promote normal energy metabolism and reduce fatigue;  Youth, which contains vitamins C, B12 and B3, peach, ginger, ginseng and aloe vera with antioxidant properties;  Defence with cranberry, rosehip and moringa to support the immune system;  Shiro, to give a boost of energy thanks to natural caffeine, cherry blossom, ginseng, mallow, and vitamin C. The functional beverage trend is rising, especially in the U.S. market.

Marketing strategies: from pop-up stores to test the market, to community building, to an $80 million e-commerce

In late 2016, Murray opened his first pop-up store on Mariahilferstraße in Vienna, Austria's largest shopping boulevard. The shelves are filled with brightly colored packaging and a wide range of mini drinks for all tastes. Hundreds of people enter the store daily, providing product feedback. This is where the brand's Austrian community base begins, which currently numbers 150,000 people and is organized primarily through local Facebook groups, where active users can accumulate activity points for every purchase they make or every time they complete a survey. In exchange, members receive preferential treatment on limited editions and can test new products. -The community is a perfect exchange tool, as well as a profitable one: group members tend to buy 3-4 times more than regular customers,- says Murray. 'Non-members,' on the other hand, can review Waterdrop products with the feedback tool built into the e-commerce platform, where reviews are posted in real-time (300,000 reviews collected so far). After collecting consumer feedback for a long time, they developed the idea of creating an app (launched last July), designed as a 'hydration tracker,' which allows users to set a daily hydration goal, and provides points and rewards for those who consistently meet and maintain their goals. In addition to marking daily water consumption, one can note favorite micro-drink flavors. Air now Data reports record a download count of 24,000 apps in just over a month.

The e-commerce was launched in early 2017 and is now the most profitable sales channel. 90% of 2021 revenue -$80 million- comes from online sales. About 150,000 customers visit the website monthly and spend an average of 35 euros per person. The best-seller is the box with the full assortment of flavors. Murray says that most customers pick their 2 or 3 favorite flavors after sampling them all and then continue to buy them over time. After tasting the micro-drinks for the first time, approximately half of the consumers buy them again.

Influencer-marketing campaigns play a decisive role in winning new markets, especially U.S.

Where do customers come from? New customers are found through TV advertising, social media, and influencer-marketing campaigns, with Facebook and Instagram taking the lion's share. On Instagram, Waterdrop has reached a fanbase of over 500,000 followers, while the Facebook page has 350,000. -When we expand into a new market, where we have yet to position the brand, and our products are relatively or unknown, campaigns in partnership with influencers play the decisive role, -Murray continues. -Annually, our investment in influencer marketing is a six-figure number."

The benefits of being a D2C and data-driven company guided by consumer demands and needs

As is often the case, the idea was born out of necessity. During a business trip, I was looking for something to drink. I realized how difficult it was to find a thirst-quenching beverage without filling up on artificial sugars or having to use a plastic bottle that would end up in the trash. That's when I realized there was a business opportunity. –says Martin Murray - Our mission is to develop environmentally friendly solutions to promote responsible tap water consumption and avoid the outdated idea of having to bottle and ship unsustainable and mostly unhealthy beverages, -Murray continues. -Nowadays, sustainability is not a privilege: it is a requirement. It is encouraging that one of the world's leading investment companies is aligning with our vision to herald a revolutionary new era in the beverage industry - Murray concludes.

Taking its cue from two themes that leverage consumer awareness over the past decade, health and sustainability, the company has experienced a growth rate of more than 400% per year since its launch, selling its products online with a Direct-to-Consumer business model. By abandoning the traditional delivery method used by the soft drink industry, pre-packaged in a container of some kind, the company took a risk at first. But there were also many advantages. First and foremost, that of escaping the already jam-packed shelves, which in most retail outlets are dominated by the big companies that control the market. The classic 'packaging plus water shipping' equation has also disappeared thanks to the new micro-drink formula. -It was always our goal to build a sustainable and data-driven business, guided by consumer demands and needs. We have eliminated the cost of packaging and water shipping, allowing us to increase production according to demand without needing further investment. -The company claims to have replaced about 30 million plastic bottles with its small recyclable packages since it entered the market. To reinforce the message of minimal waste, Waterdrop has partnered with Plastic Bank, collecting one plastic bottle for every pack of micro-drinks sold that would otherwise end up in the ocean, thereby contributing to environmental and social causes. In four years, they have sold over 100 million micro-drinks. Only 10 percent of Waterdrop's business model is non-D2C: it comes from the sales of 8000 specialty stores that have Waterdrop products on the shelf, and a small portion from single-brand stores, 15 of which are global.

The US market is set to become the largest by 2023

The large amount of data collected through reviews and social media allowed the company to establish differences in buying habits between countries around the world -A best seller in the U.S. could be a flop in Germany, - Murray says. Because powdered beverages are well established in mainstream consumption in America, Waterdop micro-drinks have huge sales potential in the U.S. market. On April 27, a flagship store opened in Miami at the same time as the U.S. market launch. Sales feedback has been great, and the U.S. market is estimated to be the largest by 2023.

The largest segment of our consumers -Murray reports -are women between the ages of 25 and 50. Women who follow a healthy lifestyle, value fitness, and know the importance of sustainability. And who, last but not least, have a penchant for fashion and glamorous accessories. -In fact, packaging design is also one of the critical points of Waterdrop's success: 20% of sales (globally) are represented by the reusable glass and steel bottles, neoprene liners to cover them, mini take-away cases for the cubes, straws, cups, and glasses, whose distinctive characteristics include multicolor patterns in delicate but original tones, of course, the same ones that define the micro-drink packaging.