Congratulations, Liquid I.V.!

It was announced today that Liquid I.V., a leading better-for-you electrolyte drink mix brand, has signed an agreement to be acquired by Unilever. We are incredibly proud to have partnered with Founder & CEO Brandin Cohen over the last two years, as he and his team have built a brand that deeply resonates with consumers and has so much additional opportunity for growth. 

The story of how we discovered Liquid I.V. in late 2017 is a testament to Brandin’s vision and perseverance as a leader – both key drivers of his company’s outstanding success. At the time, hydration was a slow, sleepy category with a stale, 800 pound gorilla (Gatorade) that focused on ready-to-drink products. Other brands in the powder space existed, but they had reached moderate scale at best and often had a specific focus on athletes with very active lifestyles. Brandin saw a gaping hole in this category, which had long been an afterthought within the consumer packaged goods (CPG) industry. 

The category was ripe for disruption, as we have seen before. Glacéau (Vitamin Water), Chobani, Halo Top, KIND Bar, and Liquid I.V. were each led by fearless innovators who ultimately redefined stagnant categories, with their eyes towards shifting consumer needs. Investors and other industry experts are often quick to dismiss certain categories as “too competitive” (what hot category isn’t?) or “too slow growth” (name a large CPG sector that isn’t growing slowly…it’s all about share gain!). At CircleUp, we leverage technology to identify companies from afar that spike on dimensions that correspond with future success. Using objective data, we strip out human bias and heuristics that lead others to overlook hidden gems (like Liquid I.V.) in seemingly unremarkable corners of the market (like hydration).  

The initial signal from Helio, our proprietary data and insights platform, that helped us identify Liquid I.V. played a critical role in driving our eventual partnership with the company. Like many other founders of insurgent CPG brands, Brandin did not attend trade shows. As consumer investors often depend on trade shows like Expo West or Fancy Food to discover new brands, we ended up being the only institutional investor to ever provide equity financing to Liquid I.V. – despite its extraordinary team and performance. 

So, what exactly did our technology flag about Liquid I.V., previously unknown to CircleUp Growth Partners, that led us to invest in the company? Through Helio, we discovered that Liquid I.V. spiked across the key dimensions we’ve found to be correlated with future revenue growth: i) a product that is differentiated in a way that matters to consumers; ii) a brand that attracts passionate, loyal fans; and iii) a company that successfully expands its distribution footprint.

Here’s how these signals piqued our interest in Liquid I.V.: 

Product differentiation: For a CPG company to scale, it must have a product that is truly unique to the consumer – one that fills an important hole. Think 5-hour Energy: energy drinks already existed, but this was the first that consumers could fit in their pockets. In the case of Liquid I.V., consumers did have access to other drink mix products, but we were intrigued by the emerging brand’s more portable stick format. 

On the product level, it was clear that Liquid I.V. elevated the consumer experience. When Helio analyzed the most unique words in product reviews, terms like “game changer”, “huge difference”, “helps”, and “stay hydrated” all indicated that consumers were very happy with the efficacy of the product. Even the mention of cane sugar was relevant: sugar was a key differentiator tied to efficacy, since it was an essential part of the science behind water absorption. Helio was able to evaluate Liquid I.V.’s differentiation from incumbents within minutes – an analysis that typically requires dozens of man-hours and thousands of dollars to produce. 

Brand strength: Product uniqueness on its own is almost never enough of a barrier in CPG – a strong brand is table stakes. Helio evaluated consumer sentiment around Liquid I.V.’s brand through a proprietary model that incorporates hundreds of data sets (more here on where we get the data and how we combine it). The technology looks to understand how positively (or negatively) consumers feel about a brand, and how intense those feelings are. 

Helio showed us that Liquid I.V’s brand deeply resonated with consumers: it consistently ranked near the top amongst peers in terms of consumer engagement. Though some competitors had similar product formulations, we saw that Liquid I.V. drew in a broader audience by addressing a widespread problem: dehydration. This more inclusive positioning enabled Liquid I.V. to be seen as a staple that could fit into anyone’s daily life. Brandin and his team have skillfully built and maintained strong brand resonance over time, as the company still outperforms on this signal today.

Distribution: Finally, we very clearly observed Liquid I.V.’s significant distribution growth throughout 2017. The company had increased door count by over 10,000 stores in just one year, an achievement that spiked on Helio’s screen of the CPG universe.  

Evidently, all signs pointed to Liquid I.V. as a compelling investment opportunity – and wow, was Helio right in spotting a brand with enormous potential. Liquid I.V. has consistently delivered incredible performance, growing revenue over 30x in the last two years. The company has won over elite athletes, whether privately in their locker rooms or as seen in partnerships with elite athletics programs like Gonzaga University (Liquid I.V. is the official hydration partner of the Gonzaga Bulldogs). But the brand has also been able to demonstrate that Liquid I.V. can fuel anyone’s lifestyle – whether they’re fighting off a cold or simply struggling to drink enough water to stay hydrated. Growing demand for the product has led to its availability at more than 30,000 retail locations, including major retailers like Target, Walmart, and Costco, and its #1 ranking in the sports nutrition hydration category on Amazon. What’s particularly inspiring is that giving back is embedded in the company’s mission: Liquid I.V. has donated more than five million sticks around the world – more than two million of those to healthcare workers caring for patients with Covid-19.

Liquid I.V. continues to be a standout brand in Helio. Its signals on retail distribution growth, where the company has outpaced key competitors over the last six months, and brand, where social media follower growth has come to lead the category, remain exceptionally strong. As for that slow, sleepy category? Helio shows that hydration as a category has garnered significant consumer interest over the past three years, with the product attribute (as recognized by Helio) growing at more than four times the rate of the broader non-alcoholic beverage category in that time period.

Like many successful entrepreneurial stories that CircleUp has followed and supported, Liquid I.V.’s “overnight” success was the result of years of hard work from Brandin and his team. From personally selling individual sticks for $2 each at a local Whole Foods five years ago, to keeping his team of 40 running on all cylinders through the Covid-19 pandemic, Brandin has done an incredible job executing on the vision for Liquid I.V. and its mission to help people everywhere live better lives – to optimize the body, hydrate those in need, and Change the World. Now, through partnering with one of the leading global consumer goods companies, the brand has an opportunity to make an even greater impact.  

We are so proud and honored to have had the chance to partner with Brandin and couldn’t be more excited for the future of Liquid I.V. as it joins the Unilever family. Thank you to Brandin and the team for allowing us to be a part of the Liquid I.V. journey.

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