Gerry’s Insights: Influencers’ Brave New World

There are some readers of my newsletter who must think I’m pretty wired into this new world of social media influencers. After all, no sooner does some mega-influencer sign on as an investor and endorser of some new beverage brand than I weigh in with my authoritative take on the transaction. What’s their personal history? How big is their following, and on what platforms? Do they seem to be a good fit with the brand? Does that unfortunate incident at the Oscars after-party (or was it the dry cleaners on Melrose?) pose a risk to the brand? But I’ll fess up: As often as not, I’ve come by this insight only by Googling that same person an hour earlier. Until that moment, I’d only had the vaguest notion, if any, of who they were.

In short, this emerging world of so-called creator brands still is new and mysterious to me. These brands that the creators don’t merely endorse but themselves create, sometimes entirely out of left field, just because they have a yen for, I don’t know – coffee? – are a mind-boggling phenomenon and I’m sure many MBAs in glass towers are frantically trying to decipher where it goes. Did I mention coffee? That was an area of interest to the then teen-aged YouTube star Emma Chamberlain, who’d charmed millions of followers with her “haul” videos showing how she put together a killer look for, like, $18 at the thrift shop. Chamberlain created a quite delicious bagged coffee brand under her name that took off as a DTC item and has been edging into retail. Her hold on her followers came through to me a few months ago when I swung by a popup event the brand was doing at the flagship Brooklyn store of Blank Street Coffee. It was packed with exuberant young women who, to my eyes, looked exactly like Emma Chamberlain. Right, I reminded myself. She’s taught them all how to dress.

At the recent Expo West, Chamberlain debuted a canned coffee extension that’s going straight into 4,000 Walmart stores. So much for the proverbial slow build. That makes it clear that something is happening and we don’t quite know what it is. I should note that these creator brands are distinct from brands created by celebrities who’ve established themselves in conventional activities like movies, music or sports, as when rock star Sammy Hagar created his Cabo Wabo tequila brand. And both are different from when celebrities sign on as investors and endorsers to existing brands.

Creator brands have been exploding in categories like food, personal care and pet care. In beverages, the creator brand that’s had bloodshot eyes popping out of heads like in an R. Crumb comic has been Prime Hydration. That’s the sports drink launched by the social influencer cum fighter Logan Paul and his ring adversary and buddy KSI, the UK rapper. By their own account, the brand sold 100 million bottles in its first year, and that was with production seriously lagging demand. That in turn led to online videos of shoppers fighting in grocery aisles for scarce bottles – which I’m sure discouraged consumers and caused them to completely lose interest in the brand. Kidding! The majority owner and day-to-day partner in this enterprise has been Congo Brands, the company founded by the youthful entrepreneurs Trey Steiger and Max Clemons. They’ve made a specialty out of harnessing influencers to brands: first, gym rat Christian Guzman for 3D Energy, which has enjoyed some success, and then fitness icon Katy Hearn behind Alani Nutrition, which has ignited at Target and served as the first true vindication of their concept. In annual scanned sales, Alani Nu is well beyond $300 million. The partners seemed to have their sights set next on an RTD tea brand via a partnership with country crooner Morgan Wallen before something unraveled that deal. But you get the point.

Alani has done well in an incredibly competitive energy category. Then there’s Prime. In its first year, Prime has handily eclipsed Alani’s performance. It’s really extraordinary, and that’s before one takes into account that there’s nothing at all breakthrough about the formula, maybe less so even than Body Armor (which put the first scare in memory into Gatorade and enjoyed an $8 billion exit to Coca-Cola). It just seems that their followers will follow Paul and KSI to the ends of the earth, or at least to a Tesco grocery. This has got to be making the CPG giants nervous. It might be another great leveler, where brand incumbency and boundless resources don’t confer as much of an advantage as they used to. Already, social media is an alternative to paid TV and DTC is an alternative to retail, though there has been a sharply escalating cost to those tools. But what’s the cost of marketing creator brands? Their consumers are coming to them, with great eagerness, pleading to be sold. One example of how this plays out? Prime apparently was able to cadge a steep discount on a Super Bowl ad just before kickoff by promising Fox that it would be bringing to the big broadcast a legion of young sports fans who do not currently have football on their agenda. So Prime seems to have paid less than Coke, Pepsi or Bud for its presence on the must-watch event.

It’s still early days, but this creator segment seems to have its own ecology. Recently, gigantic Westrock Coffee bought tiny Bixby Coffee Roasters. Hunh? Bixby’s great, but I wondered, what does Westrock need them for? Creators. Bixby’s founders, Miles Fisher and Remington Hotchkis, seem to have a knack for engaging with creator types, like Emma Chamberlain, with whom it worked to develop her line. Westrock has been reaching out to the creator economy on its own but, as its founder/CEO Scott Ford told investors, it couldn’t hurt to harness Fisher and Hotchkis in what he views as “really a sales force and a selling site acquisition for us.” Westrock is a behind-the-scenes player in beverages, but might we be approaching a point at which the branded CPG giants will be establishing their own departments to try to woo creators?

But will the creators even need them? Even if they don’t need them to navigate their growth phases, what about an exit? From the creators’ perspective, is there even a need for an exit? After all, creators gonna create, maybe through the ebbs and flows of individual brands and categories, and there’s not necessarily a time limit on how long they’ll stay at it. Hey, Mick Jagger and Bob Dylan are still rockin’ and rollin’ into their late 70s and 80s.

From the strategics’ perspective, if the brand embodies the founder, what’s the value of acquiring a creator brand whose founder is unlikely to stay engaged? Even with more conventional brands, the road forward seems hard enough when the founder exits. Congo seems to be enduring some stresses with Alani’s creator, Hearn, and it’s an open question whether the brand has progressed to a point where her direct involvement no longer is crucial to its success. There’s also the risk factor. The big CPGs have periodically suffered their share of unpleasant surprises with celebrity endorsers whom they had presumably vetted. Creators are even more of a black box. With Paul, for instance, any would-be Prime acquirer would have to wonder, what are the odds that he kills either himself or somebody else in one of his stunts? Less luridly, what if he just loses interest? I certainly don’t know the answers to these questions. I’d barely heard of Paul before wholesalers were heralding Prime as the second coming. But it’s a brave new world and some of these quirky personalities on your iPhone screen may turn out to be the next kings of commerce.

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.