Why Liquid Death’s Branding Sells—Even Though Its Water Isn’t Special | WSJ The Economics Of — Transcript

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1. 0:00♪ Breaking the law, breaking the law ♪
2. 0:02- [Narrator] This isn't what it looks like.
3. 0:04These kids aren't cracking open beers.
4. 0:07They're hydrating with Liquid Death,
5. 0:10a water brand that ditched the serene mountain springs
6. 0:13for skulls, punk rock and viral chaos.
7. 0:17What started as a joke, marketing water like booze,
8. 0:20has evolved into a company with a $1.4 billion valuation.
9. 0:25And it's all built on one simple idea:
10. 0:27making the plainest drink in the world feel rebellious.
11. 0:31- The success of the bottled water industry
12. 0:34is really the success of the marketing industry.
13. 0:36(upbeat music)
14. 0:38- [Narrator] This is the Economics of Liquid Death.
15. 0:42These are some of the top luxury bottled water brands
16. 0:45in the US.
17. 0:46Evian highlights its water's journey from the French Alps.
18. 0:49Smart Water markets its vapor distilled H2O
19. 0:52with added electrolytes.
20. 0:53And Fiji emphasizes its aquifer and pH level of 7.7.
21. 0:58Liquid Death has none of that.
22. 1:00- The traditional marketing strategy
23. 1:02for bottled water as a premium product was all about purity.
24. 1:06- [Narrator] And that strategy has a lot to do
25. 1:08with the distrust of tap water.
26. 1:11Experts say 59% of American water users
27. 1:14think that bottled water is safer than tap.
28. 1:17- Bottled water brands are just sitting back, you know.
29. 1:19They don't need to do anything.
30. 1:20This distrust is out there and people are buying this water.
31. 1:24- There's not really anything that's incredibly different
32. 1:28about our water or our products,
33. 1:29but there really is nothing incredibly different
34. 1:31of any product almost anywhere.
35. 1:33It's all just brand differences and packaging differences,
36. 1:37and that's why people buy things.
37. 1:40- [Narrator] Liquid Death's CEO Mike Cessario
38. 1:42wanted to compete with luxury brands like Fiji and Evian.
39. 1:46- We're premium. We have to be.
40. 1:47But we don't wanna be
41. 1:48far and away the most expensive thing on the shelf.
42. 1:51- [Narrator] To target a consumer
43. 1:52willing to spend money on luxury water,
44. 1:55the company focused on differentiation.
45. 1:58- We've seen it as an aspirational product.
46. 2:00We've seen it as a kind of goop-esque health product,
47. 2:04but we haven't seen it as this like counterculture product.
48. 2:10And that's just enough for someone,
49. 2:12when they're passing the water aisle, to do a double take.
50. 2:15And even those matter of seconds,
51. 2:17when it comes to consumer marketing, those are seconds
52. 2:20that marketers will spend millions of dollars
53. 2:23trying to buy from you.
54. 2:25- [Narrator] Thanks to that identity,
55. 2:26the company didn't have to spend millions on ad agencies.
56. 2:29Instead, it relied on going viral from the very start.
57. 2:32- Liquid Death, especially in the beginning,
58. 2:35relied a lot on organic marketing.
59. 2:37You're basically cutting out millions of dollars
60. 2:40in distributing your ads.
61. 2:42- [Narrator] This paved the way
62. 2:43for a move into physical retail,
63. 2:45like grocery stores, convenience shops and bars.
64. 2:48- A really good thing of distribution that they've done
65. 2:51is getting into bars quite early on.
66. 2:53You know, we don't really see that so much
67. 2:55with the newer soda brands, for instance,
68. 2:57which prioritize retail and wholesale.
69. 3:01- [Narrator] The company targeted audiences in places
70. 3:03where it would want its cans photographed and shared.
71. 3:06A 2021 partnership made Liquid Death the exclusive water
72. 3:09sold at Live Nation concerts nationwide.
73. 3:12- So many people have told us,
74. 3:13"Yes, the first time we ever heard of Liquid Death,
75. 3:15or saw it, was at a festival."
76. 3:16And then eventually, you have to imagine those people then
77. 3:19see our marketing elsewhere,
78. 3:21and then, or the next time they're in a store,
79. 3:23like, "Oh, there's that water that I had at the concert."
80. 3:26- [Narrator] In just a few years, Liquid Death has become
81. 3:28one of the most followed beverage brands worldwide,
82. 3:31outpacing luxury water brands,
83. 3:33and trailing energy drink giants, Red Bull and Monster.
84. 3:37And the company has secured distribution
85. 3:39in 113,000 retail locations in the US and UK,
86. 3:43with retail scanned sales rising to $263 million in 2023,
87. 3:48a nearly 140% increase from the year prior.
88. 3:51- Now, we've gotten a lot more sophisticated.
89. 3:53We can target specific kinds of people with social,
90. 3:56geo-targeted around a specific store.
91. 3:58Hey, within a 10-mile radius of this store,
92. 4:01we can reach these people
93. 4:03and try to give them a specific offer
94. 4:05or reason to go into that store and purchase
95. 4:08and be able to track that.
96. 4:09- [Narrator] But Liquid Death's competitors
97. 4:11aren't necessarily just other bottled water brands.
98. 4:14It's also targeting competitors like nonalcoholic beers,
99. 4:17better-for-you sodas and functional beverages.
100. 4:20- What they're trying to be is a beverage company.
101. 4:23- [Narrator] A year after the original
102. 4:24Liquid Death launched,
103. 4:25the company started selling sparkling water.
104. 4:28Almost two years later,
105. 4:29it introduced flavored sparkling waters.
106. 4:32Last year, it added iced teas.
107. 4:34And to target users of refillable water bottles,
108. 4:37Liquid Death released flavored electrolyte packages
109. 4:39called Death Dust.
110. 4:41- The minute you go into the world of flavor and texture
111. 4:45and the sense of adding fizz,
112. 4:47then you can stop to sell a product
113. 4:50that is a little bit more unique to you
114. 4:52and therefore you can charge a little bit more for it.
115. 4:55- [Narrator] Today, the company says
116. 4:56the majority of their sales
117. 4:57come from sparkling flavored water and iced tea.
118. 5:00- Over 60, 70% of our business now is not plain water.
119. 5:05- [Narrator] But some new launches
120. 5:06are still played for the joke,
121. 5:08like the brand's collaboration with Van Leeuwen,
122. 5:11which introduced a limited edition flavor hot fudge sundae
123. 5:14that the company says
124. 5:15was Amazon's best ever grocery limited time offer.
125. 5:18- We thought it was gonna be a month or two of inventory.
126. 5:20We sold out of it in six hours.
127. 5:22- [Narrator] It also sells things
128. 5:23like an almost $6,000 cold plunge,
129. 5:25a $250 murder hole game set,
130. 5:28and a mysterious country club membership
131. 5:30for the small price of your soul.
132. 5:32- Most beverage brands don't have fans.
133. 5:35We have people who, they're spending 30 bucks on a t-shirt
134. 5:38and we're selling out of it.
135. 5:39We've sold over a million dollars worth
136. 5:41of Liquid Death gold watches.
137. 5:44The brand means something more to people
138. 5:45than just like the functional difference of the liquid.
139. 5:48- That's all marketing.
140. 5:50It's all just a ploy to get that name out there
141. 5:53and to get PR and publicity.
142. 5:56It's gonna be the drinks that are gonna make them money.
143. 5:59- [Narrator] But as trends shift and new brands emerge,
144. 6:01Liquid Death does risk becoming flat.
145. 6:05- It's just gonna be really interesting to see,
146. 6:07as a brand like this get bigger and bigger,
147. 6:09can they still sustain this idea
148. 6:11of we're a punk rock independent company,
149. 6:14when by the very virtue of growing and growing,
150. 6:18you're probably not gonna end up doing things
151. 6:20that differently.
152. 6:21And the question will be,
153. 6:23whether consumers like the product enough
154. 6:26to keep buying it then,
155. 6:28or whether there'll be some kind of pull away
156. 6:30when they think that they've been lied to.
157. 6:33(bright upbeat music)