Functional beverage brand Dirty Lemon today announced it will be making the jump from direct-to-consumer sales to mass retail this spring through a national retail partnership with Walmart.
The launch will bring three of Dirty Lemon’s most popular SKUs — +Charcoal +Collagen, +Ginseng, each in 16 oz. bottles — to 500 Walmart locations nationwide, with further distribution expected to follow later this summer.
Started in 2015, Dirty Lemon has thus far existed as a direct-to-consumer business, offering 11 varieties of functional beverages built around a particular ingredient. The brand has thus far been built around parent company Iris Nova’s “c-commerce” text-to-order platform, which offers same-day delivery in New York City and next-day delivery to all major U.S. markets.
However, since announcing The Coca-Cola Company’s acquisition of a minority stake in Iris Nova in December 2018, the brand has pivoted toward expanding in mass retail to drive long-term growth. Last year, the brand entered brick-and-mortar stores for the first time: the products are now sold in around 1000 locations across the country, according to Iris Nova CEO and Dirty Lemon founder Zak Normandin, including boutique gyms like Barry’s Boot Camp and Equinox, as well as all seven Eataly outlets and all six Los Angeles locations of influential natural retailer Erehwon. According to the company, retail sales now account for 50% of total annual revenue.
Dirty Lemon also changed tack in its marketing approach, ceasing all advertising on Facebook and Instagram; in a release, Iris Nova stated that it had not spent a single dollar on digital customer acquisition in 2019 and has saved over $3 million in annual marketing spend compared to prior years.
In moving into Walmart, the world’s biggest retail chain, Normandin said the company was acknowledging that Dirty Lemon “needs to go into more mass distribution to acquire customers profitably.”
“If we rely exclusively on acquiring customers through digital channels, it becomes a very expensive and unsustainable way of building the business,” he said. “This partnership with Walmart actually allows us to acquire customers profitably at a significant scale and increase awareness around the brand in a lot of locations with customers, some who may have heard of us and some who may have not.”
The motivating factor is Normandin’s belief that Dirty Lemon has the potential to be a relevant national brand in the premium functional beverage category. In line with that goal, the three SKUs will be sold for $6.99 per 16 oz. bottle, the lowest price point anywhere (Dirty Lemon is sold online in six-count cases for $65 each, along with a discount for a recurring subscription).
Calling Dirty Lemon’s Walmart launch “the next natural step for us to get to that national level of awareness,” Normandin said the retailer’s analytics-driven approach was a good fit with his company’s own. Walmart has expanded its range of better-for-you and reduced sugar beverage options, adding brands like HFactor, Kuli Kuli, Soylent and LifeAID to its set over the past year.
“Having spent time with Walmart, I think it’s the right fit for us,” he said. “There’s a heavy emphasis on collecting the data that we’ve gathered over the past years and using that to better inform which stores we are putting the product. By putting the product in locations where our current customers already live, it reduces the risk that we would face if introducing a brand new product that nobody had seen or tasted before in a similar channel.”
While Dirty Lemon will not be distributed through Coca-Cola’s network, Normandin said the company worked closely with the soda giant to shore up production and operations ahead of entering Walmart. The brand’s launch could also be potentially replicated with some of Iris Nova’s other portfolio brands, which include sparkling apple cider vinegar drink Vina, organic sports drink Halo Sport, sparkling tea Minna and sparkling flavored water Sanzo.
“We definitely look at these retail partnerships as long-term relationships,” he said. “If we can bring these brands from a production and awareness standpoint to where Dirty Lemon is now, that’s a really exciting opportunity for us as a company.”