CBD sparkling water brand Day One Beverages has closed a round of funding led by Arizona-based family office Vincere Capital. The financing, which was stated to be a multimillion dollar round, closed in June and was announced this week.
Based in California, Day One produces a line of sparkling waters infused with 20 mg of CBD per 12 oz. can. Available in Grapefruit, Lemon and Lime flavors, the brand was initially launched in 2019 by defunct cannabis portfolio company Genius Fund, but after months off the market following its parent company’s collapse, Day One relaunched in October 2021 as an independent startup when its creator, CEO Chris Clifford, acquired the rights to the brand.
Clifford told BevNET today that the funding is set to support a significant distribution expansion that will begin in January, as well as innovations – including new flavors and CBD product lines – and updates to its packaging which will likely launch later in the winter.
“We’ve been aggressively attacking a number of markets and building wholesale relationships across the country,” Clifford said. “We have very specific markets that we’re moving into … with some pretty decent-sized key accounts. So we’ve been testing in these markets, and essentially justifying some ‘tier one’ wholesale and distribution relationships that we’ll be rolling out in Q1.”
Day One’s sparkling waters retail for $2.99 per can, which Clifford said aims to provide a more affordable point of entry into the CBD category for new consumers. However, with tighter margins, Clifford said it’s imperative that Day One begin scaling to drive volume growth.
Since last year, Clifford said the company has honed in on select markets where the brand performs well in retail, with California, Colorado, Georgia, Illinois and Minnesota comprising the key regions, while also selling online direct-to-consumer nationwide.
Beside Clifford, who previously worked in the tech industry, Day One’s leadership team primarily consists of industry veterans, including former Red Bull strategy operations analyst Max Tave as COO and former Talking Rain and Red Bull regional sales manager Joshua Arrington as VP of sales. In August, former Anheuser-Busch InBev regional sales VP Thomas Salaba joined Day One’s board of directors.
“We’re really building ourselves the foundation that is going to allow us to not only execute the killer partnerships that we have lined up across those markets, but also be able to continue to build that DSD network across the country,” Clifford said.
But even in a year that was primarily about testing the waters in various markets, Day One experienced some unexpected twists and turns. In January, the company entered a binding letter of intent to be sold to publicly traded cannabis company 1933 Industries at a valuation of $4.5 million, but the acquisition was aborted in the spring by a mutual decision from both parties.
In a May press release, 1933 chairman and CEO Paul Rosen stated that “it became evident to both parties that Day One’s capital needs far exceeded modelled projections, and with that updated insight both parties concluded it was in their respective best interests to not complete the transaction,” but noted that a co-packing agreement for Day One to manufacture CBD-infused creams for 1933 remains in place.
Clifford told BevNET that he felt the acquisition was a strong opportunity to grow Day One when he entered the agreement, but after a shift in 1933’s leadership and strategy in the spring the portfolio company saw a sharp decline in its stock value and could no longer support the deal. As part of the termination, Day One agreed to repay a $482,571 loan it received from 1933.
“Over the course of Q1 we initially decided to do that deal and roll the brand up into their portfolio,” Clifford said. “It made sense in January, come March, they had a lot of big changes that they were expecting to really drive stock appreciation, and that didn’t happen. It was just kind of the macro environment, so the CEO and I mutually decided that it probably wasn’t the best move.”
Instead, Clifford turned to Vincere Capital, an Arizona-based family office he previously worked with, as well as Aspire Financial LLC and The J Square Investments, to raise this current round. The deal was closed on June 22.
“[Vincere is] incredibly strategic,” he said. “They have a great network, they’re a family office I’ve been dealing with for a long time and they saw the opportunity. They saw our strategy, they saw where we’re at with relationships that we’ve built over the last year and they’re instrumental in our growth plan.”
Looking ahead, Day One is also working on increasing its marketing efforts. Last year, the brand was named the Official CBD Partner of USA Pickleball. The fast-growing sport has gained more mainstream attention in recent months as pro athletes have purchased pickleball teams, including NBA stars Kevin Durant and LeBron James, among others.
According to Clifford, pickleball has become a strong field marketing focus for Day One and the brand has sampled over 100,000 cans at games so far this year and has now individually sponsored seven pickleball athletes.
“It’s a very addictive sport, and it’s one of the tightest communities we’ve ever seen,” he said. “So the ability to instantly connect with consumers and sample in these communities and build relationships and be with these athletes, as they’re really kind of moving into a mainstream light, has been amazing…. It gives us a lane as well. At the end of the day, when you’re an up and coming brand you can’t focus your attention everywhere you go. [So you have] to go hard and deep with specific choices.”