Driving consumers to make repeat purchases is a critical piece of long-term success in the beverage industry. But for the founders of PathWater, the less you buy the better.
Founded in 2015, PathWater is a California-based water brand packaged in reusable and recyclable aluminum bottles intended as an environmentally-friendly alternative to single-use beverages. The company’s mission-oriented founders say they’re not overly concerned with the brand’s profit margins, but are instead seeking to launch a “revolution” that will reduce plastic waste and curb the beverage industry’s carbon footprint.
“There is no Planet B,” PathWater co-founder and VP of marketing Ali Orabi told BevNET. “Why are we spending so many valuable resources into knowing what’s out there in the universe when we can’t even take care of our own Planet A? So that’s the whole idea behind it… We’re not really in it to make money, we’re in it to make a change.”
Sustainability has been a significant concern for the bottled water category in recent years. Brands utilizing carton packaging, such as JUST Water and Boxed Water, have made sustainability and protecting the environment the core of their brand identities, but still rely on traditional volume growth models. PathWater is priced in line with other premium water brands at $2.89 per 740 mL bottle and $2.29 per 600 mL.
Speaking with BevNET, co-founder and CEO Shadi Bakour said he believes consumers are increasingly seeking alternatives to single-use plastic products and that PathWater fills a white space for those shoppers. Although the company emphasizes reusability, Bakour said early market data shows that the average consumer refills their bottle about five times before recycling.
“Everything we do is backed by our mission, we put profits second,” Bakour said. “We believe if we do the right thing then the profits will come.”
Currently PathWater is available in about 4,000 stores across 12 states, including Safeway, Gelson’s, Jensen’s, and 7-Eleven chains. According to Barkour, the company’s current key markets are in California, but that the brand is rapidly expanding in the Pacific Northwest and Southwest regions. The brand has also targeted on-premise accounts, including schools, gyms, yoga studios, and corporate cafeterias. The brand has distribution through KeHE and multiple DSD distributors.
Orabi noted that the brand’s decision to use aluminum over reusable plastic ensures the bottles are “100 percent recyclable.” However, the material choice also impacts the product’s margins. Bakour admits the metal is not inexpensive, noting the price of raw materials has only gone up since the U.S. imposed tariffs on Chinese imports in 2017. Despite this, the brand has maintained a lower price point in order to remain competitive within the water category.
“In order for us to be a true competitor and a true solution to this problem, we cannot price ourselves out of the market,” Bakour said. “So we’re willing to take a little bit of a hit on our margin in order to be able to offer it at the right price.”
Bakour said the packaging also acts as a marketing tool, as consumers who carry the bottle with them help drive sales via word of mouth.
According to Bakour, PathWater is targeting major growth in 2019. The company has partnered with New Hope to sponsor next month’s Natural Products Expo West 2019 trade show in Anaheim, Calif., where it will serve as the Official Water with multiple on-site sampling locations, refilling stations, and bottles will be placed in attendees hotel rooms.
PathWater has also brought in experienced industry veterans to help scale the brand, adding Healthy Brand Builders founder James Tonkin to its board of directors. As well, Bakour said private equity firm Black Bear Founders is leading a Series A funding round in the brand.
“I love the platform which is ‘right on the money’ regarding sustainability, recyclability, refill ability, and reusability — no other bottle water can make this claim,” said Tonkin, whose experience in the water category includes executive positions at Essentia and Icelandic Glacial, in an email to BevNET.
Tonkin, who has invested in the company, called the PathWater’s focus on sustainability “right on the money” for the industry, adding that he is encouraged by the brand’s initial market penetration in schools and that he believes the Expo West sponsorship will be the brand’s “real coming out party.”
PathWater has also brought in celebrity investors, most recently announcing the addition of Washington Redskins tight end Vernon Davis, who promotes the brand while touring schools across the country. Other celebrity investors include chef and reality TV star Guy Fieri, actress Tamera Mowry, and basketball player Festus Ezeli.
The brand’s next step, Bakour said, is to scale nationwide. The company is targeting expansion in the natural channel and is approaching the major retailers in the space, including Sprouts and Whole Foods, with Bakour adding he believes the growth rate will take off after Expo West with a goal to quadruple the brand’s revenue in 2019. PathWater is also exploring new innovations in both the water category and in additional categories, although there are no immediate plans to launch new products.
“When you hold a beverage in your hand, and you’re walking around with it, you’re showing the world who you are,” Bakour said. “So it goes way beyond just what you want in your body, it’s about how you want to be perceived by others. So when you’re holding a bottle of PathWater, it’s not only another bottle of water — it’s a badge of honor your can carry with you to say you care about the environment. You’re not only buying this bottle, this your lifestyle.”