Coca-Cola has made its interest in direct-to-consumer wellness beverage brand Dirty Lemon known. On Thursday, via its venturing and emerging brands unit, the soda giant led a $15 million round of seed funding to Iris Nova, Dirty Lemon’s new parent company, to expand into a portfolio of brands and further its text messaging tech capabilities. CEO Zak Normandin explained the parent company, Iris Nova, will introduce two new beverage concepts in the first and third quarters of 2019: The first will be a line called Tres Limón. Additionally, Normandin’s grab-and-go retail concept, The Drug Store, will expand to three additional locations next year.
“Over the last few years, we have set out with an ambitious vision, to disrupt and challenge the traditional distribution of beverage,” said Normandin. “The market has changed. The value of that direct customer connection is exponentially greater, and when we look at what we are hoping to build, there is no better partner than Coca-Cola.”
As of late, Coca-Cola has tried repeatedly to adapt to the modern consumer with its $5.1 billion acquisition of Costa Coffee in August and its strategic partnership with sports drink line Body Armor. The relationship with Iris Nova and Coca-Cola is expected to be mutually beneficial: The former is hoping to tap the soda company’s infrastructure capabilities and its expansive reach across its 500-plus portfolio of brands in more than 200 countries and territories, and Coca-Cola will look to understand Normandin’s customer-centric approach through data.
“In an environment in which consumers are overwhelmed with choice, it is more critical than ever for new brands to forge unique relationships with their customers,” said investor Chris Burch, founder and CEO Burch Creative Capital. “Iris Nova’s direct conversation with their community facilitates a level of trust and loyalty that is rare in a modern brand.”
Fittingly, Iris Nova’s products will continue to be wellness-minded and absent of sugars and sweeteners, unlike many of Coca-Cola’s products, and customers will not be able to find them in mass consumer channels like grocery stores or pharmacies. (Dirty Lemon’s drinks are $65 for a case of six bottles.) “I don’t want customers to think our products are all of a sudden going to be on massive trucks being shipped across the country,” said Normandin.
Dirty Lemon, which launched in 2015, has sold over 2 million functional beverages and has doubled revenue year-over-year for the last three years. Not only has this been due to the beverage brand’s “conversational commerce” approach — for example, only communicating with customers when they reach out via text and not bombarding them with emails or push notifications — but also due to its buzzy ingredients. In July, the brand introduced its cannabis-infused +CBD beverage, which sold out in two days during the company’s first pre-order exercise, and most recently, it released its turmeric drink. The Dirty Lemon brand will release one product a month starting in January 2019, and the cadence of the Tres Limón line and unnamed beverage product is yet to be determined, explained Normandin.
“We are looking at sparkling drinks, sports drinks. There is a lot of excitement around what we can do, since we have this powerful relationship with the customer,” he said. In 2019, the Iris Nova company expects to grow revenue by 250 percent through the addition of its new brands and products.
Iris Nova will use $1 million of its seed round to invest in emerging beverage brands over the course of the next year. “We want to continue to use our platform for innovative companies across the beverage space,” Normandin said.
