China Food

DTC multi brand parent company: “P & G” and “Unilever” are forming in the new era

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A 6031 start-up company friends all know that if there is a piece of advice to start-up entrepreneurs, it is to focus on your products and markets, rather than rush to diversify.
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The book I finished reading during the National Day holiday was playing to Win:How Strategy Really works]. If P & G, Unilever, Coca Cola and Johnson & Johnson, the world’s largest consumer goods groups, were born in 2020, how would they start this company?

What should remain unchanged is that they will still find the strongest needs and wishes of people in this era, develop a super product based on the market, and let people feel that this product is indispensable in their life, even spiritual support. The brand image must also be young, active, cool and fashion to help people express themselves and make a zeitgeist. Their marketing will use the most advanced media at this time to launch spiritual movements, not just advertising campaigns.

What’s changing is that in the era of information equality, the original sin of the industry can be covered and fewer and fewer people start their own businesses. This company needs to be honest, transparent, shoulder social responsibility, and have its own distinct values, so that it can be heard and understood in the noisy market. In the new era, consumer goods companies will become more and more like Internet companies. Innovative technologies and business models of the Internet are further integrated with consumption. After more than ten years of Internet product baptism, these new companies deeply understand what user experience is, what service design is, and the importance of directly communicating with users to obtain personalized data. The product becomes a medium, the marketing department of the new company becomes an internal creative agency, and the whole company is more like a media company. These new companies will also find business models beyond the limitations of the times and industries and become brand family + platform companies in the new era.

Previously, I wrote an article summarizing the pattern of a new type of company in Silicon Valley and New York: venture studios. This article summarizes another new type of company that has emerged in the past two years, which I call DTC brands holding company. These companies all want to become brand groups in the new era. I would like to summarize some representative companies, which are worth learning from.

Iris Nova

irisnova.com

Location: New York City, USA

Time of establishment: 2018

Representative brand: dirty lemon

Investor: Coca Cola

Dirty lemon is one of the most successful Internet red functional beverage brands in the United States in recent years. It was co founded by the founders Zak normndin and Sommer Carroll in 2015. Iris nova, the parent brand of dirty lemon, wants to be “Netflix + Coca Cola”, a non-traditional beverage company.

Iris Nova has three key words, “fashion + healthy drink + technology”. Founder Zak normndin is from the food and beverage industry and a partner in a creative marketing agency in New York. Zak founded little duck organics, a children’s organic food company, in 2008 to sell through offline shopping channels such as whole foods.

In 2013, Zak sold little duck organizations. In the process, he felt that as a new brand, he could not directly face consumers, nor could he quickly deliver products to consumers. It was a failure. After seeing the problems in the traditional food and beverage industry, Zak realized that if consumers want to buy their favorite drinks more easily, they need to break the traditional retailer shelf model. For millennials, what kind of drinks consumers choose to drink also represents what kind of people they are, just like what brand of coffee shop you choose to go into and what brand of wine you choose to order in the bar, which represents your taste of life. Zak plans to create a beverage company of the future that uses nontraditional packaging and channels and faces consumers through technical support. When they launched dirty lemon in 2015, they started with a single product: black and white striped high color bottles, lemonade functional drinks with edible activated carbon and sea salt minerals.

In the US market in 2015, consumers began to “awaken their health awareness”, and it became a consensus to eat less sugar and drink less carbonated drinks. However, dirty lemon saw the next step ahead of time: consumers not only need less sugar, but also show a desire for healthy functional ingredients. So dirty lemon chose a drink that American people like very much: lemonade as the core, to match with different health active ingredients, in addition to active carbon from plant ingredients (detoxification), collagen (beauty and skin care), CBD (relaxation and decompression), Matcha (refreshing), Rose (beauty spot), ginseng (vitality enhancement), chamomile (sleep assist), etc. Although there are many people who question the effectiveness of these “functional ingredients”, dirty lemon said that they will combine nutrition science and consumer preferences to decide what kind of drinks to launch (Nutrition Science + customer preferences). Dirty lemon now has the ability to move from concept planning to online sales of a new drink in 30 days.

Zak has not only created a fashionable functional beverage brand, but also built an advanced sales platform: placing orders through SMS (the usage rate of SMS in the United States is higher than that of instant messaging software). Zak has called this dialogue based e-commerce system “c-commerce”. Dirty lemon is also developed with twilio, an advanced artificial intelligence company, and stripe, a mobile payment company. Similar SMS based ordering systems like Domino’s Anyware and barkbox, a pet food box, are also used in the United States, but Zak said the inspiration for the system came from wechat because he saw that all transactions in China could be easily done on “chat software” such as wechat.

In 2018, dirty lemon received US $15 million equity investment from the venture capital Department of Coca Cola, which allowed Zak to launch iris nova, the parent company brand. With the help of Coca Cola’s industry resources and global network, it can use the successful experience of dirty lemon to replicate more brands, and can directly invest in other beverage brands in the initial stage and incorporate them into its own network.

By 2019, dirty lemon has eight flavors of drinks, sold 2 million bottles, and processes 50000 SMS messages a month. In 2019, dirty lemon acquired poncho, a weather forecast chat robot company, which is one of the best Chatbot applications in the United States. The acquisition of poncho surprised many people, but Zak believes that more interesting and vivid conversations will make customers more willing to interact with their platform, thus improving repurchase. Compared with the current popular subscription business model in the United States, Zak prefers to buy on demand.

In 2019, dirty lemon also opened its first offline experience store, the drug store, in the Tribeca block, where young people gather in New York City. The drug store is also an independent physical store brand operated by iris nova. Because they found that they could no longer obtain customers very cheaply on instagram, they turned to offline retail marketing, so that the whole brand also had an online sales platform and offline physical experience.

Users can pick up their own drinks from the unmanned vending cabinet of the drug store after placing an order through SMS. At the same time, the drug store also has a “non-alcoholic beverage bartender” to make drinks on site, collect users’ taste preferences, test new products, get the first-time feedback, and then push out ready to drink bottled drinks.

When asked whether iris nova is a food and beverage company or a technology company, Zak mentioned that the company that inspired him most was Netflix, He believes that now they are investing in technology and building their own platforms, which will help them test more products in different fields, including beauty and wellness, because their goal is to become a comprehensive consumer goods group. Zak thinks it will be more and more difficult to create a billion dollar brand, but it can create a billion dollar organization. Consumers’ tastes will change all the time, and the trend will come and go in a hurry. It will move forward with the trend instead of focusing on “the success of a brand”, but the success of the organization.

Finally, there is a brand concept that I think is particularly good. Zak thinks that consumers want to have a brand that can make them feel excited and help them escape from reality temporarily. So when they launch a new brand, they want to create what kind of story and what kind of journey they can make consumers feel that they are part of it. In fact, more than 100 years ago, Coca Cola was also such a brand, helping people to relax in a heavy life and become more energetic.

Iris nova is a cool company as a whole, but their biggest challenge is how to make profits as soon as possible. Otherwise, it will easily become a “consumer goods marketing company” rather than a powerful challenger in the industry. Building more successful brands like dirty lemon is also a touchstone to test whether iris Nova has gold content.

Redesign Health

redesignhealth.com

Location: New York City, USA

Time of establishment: 2018

Representative brands: proper, vault, lively

Investor: declaration partners (David Rubenstein’s family fund)

Redesign health is an investment fund + brand incubator focusing on health consumption and medical technology.  ( Redesign Health is a venture studio and DTC holding company incubating tech-enabled healthcare businesses ).

Redesign health brings together several types of people: 1. Professionals familiar with the medical and health market (industry resources and knowledge); 2. Business talents familiar with the consumer market and business model innovation; 3. Technology and operation with Internet and technology background; 4. Branding and design talents.

Redesign health’s vision is to create a modern healthcare industry company, provide an innovation platform, create innovative medical technology and health consumer brand companies, and provide patients and consumers with valuable solutions that can change their lives. Most of the companies are incubated and launched into the market by themselves within the redesign health team, while a small number are incubated by outside entrepreneurs.

Companies incubated by redesign health include: vault, a male health care brand( vaulthealth.com ), hearing aids and medical services for hearing-impaired people( listenlively.com ), skin health and professional skin care service brand “ever / body”( everbody.com )。 There is also a famous singer and singer named proggop, which will invest in the famous brand of health in 2020( getproper.com )。 There are also several brands that are incubating in stealt mode, such as medarrive, redesign health, which invited Dan Trigub, the former head of Uber health, to join them in incubating a new mobile medical transportation service company.

The brands incubated by redesign health emphasize their professional compliance with medical standards. For example, proper’s sleep supplement capsule emphasizes that every natural ingredient (including plant extracts and vitamins) has undergone medical clinical research, and is formulated by professional nutrition medicine experts. In addition, it provides online “sleep” with app “Coach” and guidance suggestions. Several different formulations have different characteristics for different stages of sleep / anxiety / sedation / emotional problems. They are more specialized and subdivided than general sleep supplements, such as melatonin fudge, and can solve sleep problems from the perspective of long-term improvement.

Vault, which provides personalized male health services and products, costs about $75-299 per month.

Compared with traditional medical and pharmaceutical companies, redesign health places special emphasis on its own corporate values (figure below). Only by following these values can we avoid the negative impression of many pharmaceutical and medical companies on the public and become a brand driven company.

Present Life 

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The Craftory

presentlife.io

thecraftory.io

Setting: New York City, USA, London, England

Time of establishment: 2020 (present life)

2018 (the craft)

Representative brands: healist, Loum, one ocean beauty

Investor: the craft and individual LP

Present life and the craft are two companies, but they are a unique combination.

Present life is a wellbeing & Beauty DTC holding company, and the craft is a growing enterprise venture capital fund certified by B Corps mutual benefit company, focusing on consumer goods investment. The workshop provides funds (initial investment of 20 million US dollars). Present life integrates the industry resources and experience of CpG companies, as well as the mode of brand incubation of start-up companies, to create new brands that are valuable to consumers and friendly to the earth.

Official website of present life

The craft website

The craft was founded in London, UK in 2018. With the new generation of consumer goods companies in Europe and the United States to meet the universal values of today’s Europe and the United States: Health + environmental protection (well being and sustainable), some new investment funds based on value differentiation have also emerged. This is not only because the European and American markets have indeed entered a more mature stage than the domestic consumer markets, but also reflected in the consumption data of the younger generation. According to a data report from modern retail in the United States, among more than 2000 millennials, more than 78% of young people prefer to choose products that conform to the health trend and protect the environment.

At present, notco, a food technology start-up company headquartered in Santiago, Chile, has received more than US $8500 from well-known investors including Amazon founder Jeff Bezos. The founders of notco include food scientists and Algorithm Engineers. They first invented a set of algorithms to calculate how to create the taste and composition of “plant-based” food and beverage, which can achieve the goal of replacing meat food. The company’s current “vegetable milk” product has just entered the U.S. market, competing with the star companies in the field of plant-based products, beyond meat and perfect day.

Camillo pane, founder of present life, which was founded in 2020, was the CEO of Coty Inc., a well-known American cosmetics group, before joining the start-up company. The company has a number of American brands with annual revenue of more than $9 billion.

Present life is also a company in the field of “plant-based”. Camillo pane hopes to create a series of new brands of “beauty meets wellness”, while taking into account social value and environmental sustainable development. The raw materials of all its products are from natural molecules and plant ingredients.  

At present life internally incubates two brands: healist (hemp extract skin care brand), Loum (natural skin care brand inspired by mental health Dermatology), and one acquired brand: one ocean beauty, A skin care brand with marine collagen as the main ingredient, and part of the income from this brand is used for marine environmental protection. Degradable materials and marine waste recycling materials are used in the outer packaging of the three brands.

Healist 

The combination of present life and the craft combines the mature experience of large consumer goods companies in brand building, the fast trial and error style of start-up companies, and the resource support of value oriented investment funds. But at present, compared with the new brands made by more young founders, the first three companies of present life are still slightly mature, or in other words, they are more like the new brands made by P & G and Unilever. Whether they can impress young customers remains to be seen.

However, it is worth paying attention to whether an investment fund plus brand company with such positive values can actually fulfill their brand commitment.

The above three foreign DTC multi brand parent companies are respectively from the food and beverage, medical and health care and beauty and personal care industries, which are the three hottest markets for the combination of consumer goods and technological innovation.

In addition to the above three, there are a few worthy of attention. I will not elaborate here. Interested students can Google:

Thirty Madison 

thirtymadison.com

The parent company of “online medical + chronic disease drug DTC brand” located in New York City received strategic investment from Johnson & Johnson in 2020.

Arfa

arfa.co

Beauty and personal care DTC brand parent company founded by glossier coo hopes to create a new era of P & G with user and community-centered brand values.

The Urgent Comapny

theurgentcompany.com

The urban company, supported by perfect day, a well-known food industry company, is a basic requirement for all its incubated brands.

Innovation Department 

innovationdept.com

A New York based DTC brand incubation company founded by the founder of dojomojo, an Internet marketing technology company, not only incubates its own consumer product brands, but also establishes a technical tool and data platform for users to acquire and cooperate with the brand.

As the friends of start-up companies know, if there is a piece of advice to start-up entrepreneurs, it is to focus on your products and markets, rather than rush to diversify. DTC’s multi brand parent company is still an emerging company model. Diversification is not to disperse, but to find promising and valuable core business faster, and twist it into a rope. This is the biggest challenge for today’s entrepreneurs.  

Author: Fan Yang; source: Fan Yang (ID: beingmorehouman), reprinted with authorization.
Join the community: Cherry (wechat: 15240428449);
Business cooperation: Amy (wechat: 13701559246).
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