How Liquid Death Overcame the Odds and Thrived

They say the only certainties in life are death and taxes, but not far behind that must be the fact most new brand launches fail.

Creating a successful new brand is more challenging than it seems, especially after spending years marketing beverages and launching new brands. At Britvic, I analyzed data from Nielsen for ten years to understand the success rate of soft drink launches. Let me break it down for you.

Starting small is almost a guarantee when it comes to new products, with only about 2% reaching sales above £1m in their first year. The top 20 performers in year one mostly consisted of product extensions that capitalized on the strength of the parent brand. However, the challenge becomes even greater in year two, as 50% of these top performers actually saw a decline in sales. In the long term, approximately eight out of 10 products had exited the market completely.

Clearly, the odds are not in your favor.

After five years, the most successful new product launches looked very different from year one. Instead of big launches, the list was dominated by brands that had started small in niche parts of the category and quickly grown to surpass them.

In conclusion, I found that on average, it takes seven years to achieve overnight success.

Let's talk about Liquid Death.

The brand was trademarked seven years ago and launched two years later. Just recently, its latest funding round this month doubled its previous valuation to $1.4bn. I had the opportunity to chat with its founder and CEO Mike Cessario on the Uncensored CMO podcast. Our conversation was incredibly fascinating and insightful, providing a blueprint on how to beat the odds when launching a product.

If you haven’t heard of Liquid Death, you must have been living under a rock. This brand has revolutionized the soft drink industry in the last ten years by offering spring water in a can, promoting a more sustainable way to stay hydrated. Liquid Death stands out from other water brands with its unique approach and branding.

According to Cessario, Liquid Death used 10 clever tactics to defy its own demise.

1. Every successful startup has a memorable origin story that people love to talk about. Think of companies like Innocent, who started by handing out smoothies at a festival and asking people to vote on whether they should quit their day jobs. Or Brewdog, whose founders raised money from beer drinkers after being turned down by the bank. These stories capture people's attention and make them stand out in a crowded market.

Cessario has had many inspiring experiences that have shaped Liquid Death. For example, he once saw a band using Monster cans to drink water, sparking the idea for his own brand. Additionally, he started a Facebook page for $2,500 just to test the brand concept, which gained 60,000 followers and helped secure funding for his venture.

Learning from failure is a crucial part of Cessario's journey.

It's interesting to hear how many successful entrepreneurs discuss the challenges they faced before achieving success. For Cessario, his previous experience launching a brandy taught him valuable lessons. He discovered that industry regulations and disagreements with investors were major obstacles. During our podcast interview, he emphasized the importance of choosing the right partners, as it can impact your success more than the actual work you do.

Having an outsider perspective can be advantageous in business.

Sometimes, not knowing all the reasons why something might not work can actually lead to success. As Cessario mentioned on the podcast, being unaware of the rules can sometimes be an advantage. This is what Adam Morgan refers to as "intelligent naivety" in his book Eating The Big Fish. Being inexperienced in a certain field can actually help you think outside the box and come up with innovative ideas.

The saying "the opposite of a good idea can be a better idea" holds true in many cases. It's important to not be afraid to challenge traditional thinking and consider alternative solutions. Being open to new possibilities can lead to unexpected and improved outcomes.

Liquid Death is a prime example of a concept popularized by Rory Sutherland in his book Alchemy. The company challenged themselves by asking what the dumbest possible idea for selling water would be. This led to the creation of a brand with the worst imaginable name - Liquid Death.

By going against the grain and choosing a name that major players in the water industry like Danone, Coke, and Pepsi would never consider, Liquid Death set itself apart. The decision to package water in a can further solidified its unique and unconventional approach to selling water.

One of the biggest challenges for startups is investing money in a product before knowing if it will sell. The minimum volume for a new product launch is usually very high, requiring a significant amount of money for the first production run.

Cessario set up the Liquid Death Facebook page early on, even before the product was ready. It quickly gained a large following of fans who loved the idea. This allowed him to raise funds from friends and family, and when Liquid Death finally launched, it sold out within a month.

The next step was to grow rapidly and reach a size where competitors couldn't easily replicate the product. Cessario referred to this as achieving "escape velocity". To do this, the brand sought venture capital funding. They partnered with a company experienced in supporting successful direct-to-consumer brands, which provided valuable guidance and resources.

Without execution, your idea holds no value. As Cessario points out, "ideas themselves are worth zero dollars"; it is the action taken to bring them to life that gives them worth. In the highly competitive US beverage market, companies like Coke and Pepsi dominate the shelves in stores and have direct relationships with retailers, bypassing distributors.

Cessario initially went direct-to-consumer to overcome challenges. Despite the lack of financial viability, selling at $20 per 12 pack showed strong demand. This caught the attention of major retailers like Whole Foods and 7-11, leading them to start carrying Liquid Death. An important strategy was also utilizing on-trade distributors that cater to bars, restaurants, and other venues with less market control by a few big companies.

Creativity often thrives when faced with limitations.

According to Cessario, marketing is all about grabbing attention - you can either pay for it or create it. As a startup, you have to focus on creating attention. Liquid Death strives to make everything it does entertaining enough for people to share with their friends. Sometimes, having limited resources can actually lead to the most creative ideas, rather than having a big budget.

For instance, Liquid Death's Instagram and TikTok accounts have a larger following than all the major water brands combined. They achieved this by using humor and parody to create engaging content, rather than just promoting the brand.

When I was part of a team that acquired Juice Burst and re-launched the brand with no advertising budget, I learned a valuable lesson. I created the world’s first augmented-reality soft drink brand, which received a lot of press, caught the attention of trade buyers, and engaged consumers. This innovative idea would not have been possible if we had a big budget to rely on.

Packaging plays a crucial role in reaching your audience. It serves as your greatest form of media, communicating your brand's message and attracting customers. Make sure your packaging is eye-catching, informative, and reflective of your brand identity to make a lasting impression on consumers.

Cessario has broken the convention that you need lots of facings on the shelf to stand out. When your brand name is Liquid Death, your packaging looks more like an energy drink than a water brand, and your product comes in a pint-sized can in a sea of clear plastic, you are sure to catch people's attention.

The value of Liquid Death's packaging was clearly demonstrated at the Super Bowl. Instead of spending $7 million on a 30-second commercial, the brand realized that the same number of people who watch the Super Bowl walk past its packs in Walmart each week. As a result, they decided to spend $10,000 auctioning off their packaging as a form of 'advertising' on eBay.

In the end, Coinbase, a crypto company, emerged as the winner of the auction. They paid a little over $500,000 for the opportunity to feature their ad on Liquid Death cans. This purchase now ranks as the ninth most expensive item ever sold on eBay. Despite the high cost, Coinbase also gained valuable publicity and attention through the competition.

Entertaining for commercial gain is the ninth point to consider.

At System1, we often talk about the concept of 'entertain for commercial gain' to emphasize the importance of creativity in branding. Liquid Death is a great example of this, as Cessario believes in entertaining people through comedy and making them laugh more than anyone else. The brand has high standards when it comes to recruiting team members, focusing on creating hit comedies rather than just ads.

Cessario strongly believes that a brand without a unique and entertaining aspect is not really a brand at all. This dedication to building a strong brand identity has been key to Liquid Death's success, allowing them to expand their business through merchandise and enter new market segments.

10. Hire the best people in every position

When I asked Cessario for his top advice, he shared this valuable insight: "Be honest about your strengths and hire people who are smarter than you in areas where you may not excel. It's worth it, even if it means sharing a part of your company."

No one can excel at everything and nobody can do everything, so I believe that the key to a successful expansion lies in the people you bring on board.

If you want to learn more about how Liquid Death overcame challenges and defied the odds, look for the 'Uncensored CMO' podcast on your favorite podcast platform.

Editor's P/S:

The article delves into the challenges of launching a successful new brand, revealing that only 2% of new products reach sales above £1m in their first year. However, it highlights the exceptional journey of Liquid Death, a brand that defied the odds and achieved remarkable success within seven years. Through a series of clever tactics, including a memorable origin story, learning from failure, embracing an outsider perspective, challenging traditional thinking, and focusing on entertainment, Liquid Death has carved a unique niche in the market and become a recognized brand.

The article also emphasizes the importance of assembling a talented team, hiring people who complement your strengths and weaknesses. It underscores the significance of creativity, especially when faced with limitations, and the power of packaging as a form of communication. By understanding the factors that contribute to success and learning from the experiences of others, businesses can increase their chances of navigating the competitive landscape and achieving their brand goals.