We had the delightful opportunity of starting in the middle of a pandemic which has certainly been challenging for us as well as many other brands, but nevertheless - we’ve grown over 100% every year since inception - so in general, it’s been great.
My background is in technology, I worked at Facebook, leading mobile product teams and running the Pages group. And my co-founder Kal is one of the best baristas in the world with a background in food science. When we met, we spoke about a unique opportunity we both saw in the market:
For starters, canned coffee doesn't taste great. And secondly, once you drink too much caffeine - you get all jittery, which is not a good feeling at all.
So we set out to create a delicious coffee that will make you feel “inspired, not wired”. That’s why we use an adaptogenic formula with amino acids and functional mushrooms that works really synergistically with caffeine.
In pre-launch, we started selling via word of mouth - we sold our product in offices on startup campuses in the Bay Area. That was our “D2B” approach: “Direct to Business”. We were rolling with this model, making good revenue early on. But then in March 2020, everybody went home - and we had to pivot and turn into a real D2C business.
The shift to D2C in 2021 and our first retail presence at Erewhon got us this huge flood of information. Our canned beverage had a huge phone number on the can - so that played a big part in driving a large amount of feedback quickly.
Most likely the introduction of a shelf-stable product.
We started with a fresh coffee product which had to be kept cold and had to be delivered via last-mile, 2 hour delivery solutions with ice packs. That wasn’t cost-efficient, nor scalable. So we decided to shift to a shelf-stable product. It wasn’t easy, but with a genius full-time food scientist on the team, we did it in 3 months. We created our own plant based milk from macadamia milk, designed a custom sweetness stack and had a whole bunch of proprietary processes to protect the flavor and the taste of the coffee.
By January 2021, our canned drink was ready for scale and that was a real inflection point for us. That year, we did 65% of our revenue in D2C and started learning about how to make inroads on the retail side.
2022’s been a slightly different story - we’re cracking the retail distribution model, partnering with great distributors across the country to get our product where it needs to be including Gelson's, Thrive Market, Jimbo’s and more. So today - our growth focus is in 2 areas: #1: Increasing distribution. #2 Finding the right opportunities for sampling & getting people to try the product at the right places, in the right experience.
It’s definitely been a big part of the journey for us. They’re still a significant customer for us and an entry point for our newest products. Erewhon is a halo experience where the products that get into it set the standard for the industry. Many other stores take inspiration from it and make purchase decisions off of who’s in the store. So we were lucky to get in quite early on - mostly by hustling / calling and shipping them products.
Yes - they have a portal where we can go into and see how our sales have been. We can compare ourselves to other brands and also pick promotions from the platform itself. For us non-CPG tech folks, seeing the data really helped us crack retail - and we could ultimately use those insights in other retailers too.
For example: The simple promo of having a stand with Taika as you walked in tripled or quadruples our sales that month. The ROI was definitely there, and the sales don’t fall off a cliff post-promo. So we continue to double down on insights like these that come from the Erewhon data platform.
Sure - once again, when we stopped shipping with ice packs, our DTC channel was truly unlocked. And eventually, we cracked the ads component too through real investment in high quality creative. Amazon’s also become a sizeable channel for us too and in some months outperforms our DTC site.
I will say this though: There are 0 billion dollar businesses that are beverage DTC-only businesses. Shipping liquids is expensive while retail is an infinite channel.
However, DTC for us has been a brilliant channel when it comes to repurchasing and retention. We're seeing 50-80% customer repurchase rates, and our subscription offering in DTC is really the driving force behind the channel.
With our number on the can, we had lots of people texting us from the store asking us if they should buy the coffee. So it’s a great opportunity to convince them to do so - but also, it’s phenomenal from a CX perspective, because any time there’s an issue such as a wrong order, the customer knows to text us and they’ll get a reply within 20 minutes. Some customers have been texting us for two years now. And in the loneliest COVID times, we sometimes acted as a friend. We’re blessed for that, and it gave us a taste of building real community which we’ve continued to build upon.
Yes, so we recently started working with a web3 collective called “Friends With Benefits”. What we did is co-create a product in 3 phases:
Phase 1: We worked with 100 people at FWB, gathered their feedback in multiple tasting sessions to start identifying a certain flavor.
Phase 2: We created an NFT called “Mateverse: The Official Beverage Of Web3” which is also the name of the beverage we’d co-create. As part of the NFT purchase, you redeem a case with 2 different flavors: The “red pill” can or the “blue pill” can. You could then cast your vote, which would be recorded on the chain. And ultimately this would decide the final formula. As part of this experience, you also got to join our Telegram community where we throw exclusive member events, give away tickets to festivals etc.
Phase 3: Right now we have enabled token holders and members of the FWB community to purchase our product exclusively, and expanding for all general consumers shortly to buy as well
Once we switched to a non-perishable can, we found an outstanding 3PL in Nevada and also started working with a warehouse in San Francisco. On the DTC side, everything gets shipped from the 3PL and for our retail / distributor orders, those get routed from the warehouse directly.
And I’d say the biggest win was getting our 3PL to create sampler packs for us on site. Instead of having to create the variety packs at our copacker, we now just have the 3PLs pick and pack them themselves which is a big unlock from an inventory standpoint.
The #1 most important tool in our DTC business is Shopify (headless architecture though using a combination of Javascript frameworks + Contentful as a CMS).
Next, we use Klaviyo for email marketing. For subscription, we use Skio. They've set things up for us beautifully and the team is wonderful to work with.
We also use Novel for the web3 token getting experiences. And for reordering, we have a QR code on each one of our cans that takes customers straight to checkout - that’s powered by Batch. + a big shout out to the wonderful team at Day Job for putting together this experience for us.
That’s our custom app; our secret sauce. Built on top of Twilio.
We’re constantly making new mistakes, and not making the same mistakes. So learning from mistakes and building scalable systems where possible are 2 of the biggest things that brought us here.
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