Right now, Spindrift is happy “doing its own thing” says founder and CEO Bill Creelman, who began making his own drinks in 2010 to help kick his Diet Coke addiction, has since carved a unique niche in the beverage aisle by using just two ingredients: lightly carbonated filtered water and freshly squeezed fruit juice.
(Check out the labels of other brands in the sparkling water space, and you’ll see just how unusual this is; most also contain at least one of the following: natural flavors, preservatives, added sugar, or high intensity sweeteners.)
Speaking to FoodNavigator-USA after phasing out natural flavors (which featured in selected Spindrift SKUs in the past) and unveiling plans to discontinue its sugar-sweetened soda line to focus exclusively on its unsweetened sparkling waters, Creelman said: “We’re always having friendly conversations [about the exit strategy], but we are very much doing our own thing right now.
“Typically you see those partnerships [with big CPG brands] when there’s a barrier you need to overcome to fulfill the promise of the brand, but in our case we feel like we have all the makings of a brand that can be disruptive without those partnerships,” added Creelman, who has raised just under $10m in two funding rounds in April 2014 and December 2015 and says Spindrift has "been fortunate enough to experience triple-digit growth each of the past two years.”
He added: “We believe in our points of difference and think that sparkling water is the next big category to emerge in beverage, and we’re not aware of anyone producing a product the way we are producing it.
“It sounds really simple but it isn’t, so in that respect, we’re just getting started when it comes to the opportunity to grow with retailers as they develop their sparkling water sets and emerge as the premium solution within those."
Retailers often integrate sweetened and unsweetened products, which confuses consumers
He explained: “We are trying to create a separate category because we really are unique; the challenge is going out there and communicating that, because even in retailers where they have whole aisles dedicated to sparkling waters, they often integrate sweetened and unsweetened products, which makes it hard for consumers to figure out what they are buying.
“So we spend most of our time with retailers talking about the category and the need to introduce a premium unsweetened sparkling water to the set. There are also so many opportunities for cross merchandising with other products, or putting our products in the produce set, or doing seasonal activations such as strawberries in the spring and cranberries in the fall, so we really are just getting started.”
“Typically you see those partnerships [with big CPG brands] when there’s a barrier you need to overcome to fulfill the promise of the brand, but in our case we feel like we have all the makings of a brand that can be disruptive without those partnerships.”
Bill Creelman, founder and CEO, Spindrift
Channel strategy: First foodservice, then grocery…
As for the channel strategy, Spindrift made the unorthodox decision to start in foodservice, targeting chains such as Panera Bread, in part because Creelman “thought I might get lost in the grocery shelves where it’s very hard to tell a story given all the choices.”
More recently, however, Spindrift has picked up business with Trader Joe’s, Sprouts, Costco, Whole Foods and Target, and is devoting a lot of energy this year into building relationships with leading grocery chains.
As for distribution, said Creelman, Spindrift is now in several thousand locations, and is focusing on delivering direct to retailer warehouses where possible:
"Distribution is a huge challenge for beverages because the big systems [Coke, Pepsi, Dr Pepper et al] have done an amazing job of locking up space. We have great distributor partners, but our preference is to work direct with retail partners and grow our business as a warehouse brand. So wherever possible we are shipping direct to retailers. And because the velocities are there, we can really justify it.”
Did we walk away from lots of revenue that was growing quickly? Yes we did
So why is Spindrift dropping its original sugar-sweetened soda line (which is sold in glass bottles, whereas the unsweetened line is sold in cans) if it is performing as well as Creelman claims?
Because it’s not consistent with what the brand is all about (sparkling water + real fruit), anymore, he argued.
“When I started the company I was just focused on making something as delicious as possible and with the formulations I had at the time, they really required sugar. But over time we just got better and better at producing our products such that they just don’t need it.
“Last year [when Spindrift underwent a packaging and branding overhaul] we arrived at a brand position of sparkling water and real fruit, that’s what our brand is about and sugar just doesn’t fit into that. And our sparkling waters were so delicious and refreshing without the need for added sugar that we just said, why are we doing soda?
“Did we walk away from lots of revenue that was growing quickly? Yes we did, but my job is to keep this company focused.”
Goodbye to natural flavors: ‘We never got to the point where we could definitively say what was going in our product and I just wasn’t comfortable with that’
The decision to ditch natural flavors reflected the same desire for transparency and simplicity, he said, noting that Hint Inc was recently accused of falsely advertising its wares as ‘all-natural’ when they contained natural flavors featuring propylene glycol (PG).
While PG is an FDA-approved synthetic substance widely used as a solvent in natural flavors, the lawsuit alleged that consumers would nonetheless not expect to find synthetic substances in a product labeled as ‘all natural,’ regardless of the letter of the law around natural flavors, said Creelman.
“By around 2013, 2014, the #1 question we were getting from consumers was: 'What is in your ‘natural flavors’? Which makes sense if you think about it, since the only ingredients in our sparkling waters were water, juice, and natural flavors.
“The problem is that when you buy natural flavors, they are not required to disclose exactly what is in there. You can ask hard questions, but we really never got to the point where we could definitively say what was going in our product and I just wasn’t comfortable with that. So we began gradually making the transition away from using natural flavors about two years ago, and now we are no longer producing any formulas with natural favors.
"They were only in there as a backstop, but taste of our products has got so much better because of the process changes we have made that the consumer will not notice the difference. If anything, the products taste even better now.”
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