Løs Sundays Tequila Raises $3.5M

California-based spirits brand Løs Sundays Tequila announced today it has closed a $3.5 million Series A funding round closed out by CircleUp Growth Partners.

What is Løs Sundays Tequila?

Founded in 2017, Løs Sundays Tequila primarily markets its line of spirits — which includes Blanco, Reposado and Coconut tequila varieties — to younger consumers with a focus on women. Using an all-female marketing team, the brand has built out a footprint of roughly 3,000 stores in two countries, including 30 U.S. states plus Washington, D.C. The brand has partnered with Southern Glazer’s Wine and Spirits to distribute the product nationwide.

The brand has previously raised money from Ketch Ventures and New York-based investment firm Room 9.

While the tequila category has traditionally trended toward older, male consumers, Løs Sundays founder and CEO Mitchell Hayes said the brand has focused heavily on social media marketing to “skew the narrative” and disrupt the category with a product that can win on both flavor, better-for-you messaging and free-spirited branding.

According to CircleUp, more than 60% of Løs Sundays consumers are under age 34 and less than 10% are over 55. Comparatively, less than 30% of Jose Cuervo consumers and fewer than 10% of Casamigos consumers are under 34. Roughly 70% of Løs Sundays consumers are women.

“We kind of saw this opportunity where it was the first time every millennial was of drinking age, every one of them has a smartphone in their hand or in their pocket, pretty much 24/7, and they’re all on social media,” Hayes said. “All of a sudden, you have this gateway to be able to access consumers instantly and for free. So we saw the amount of love there was for tequila in this demographic, and we figured that we know who they are, and we’re going to hone in on that consumer and figure out a way to engage with them and talk to them.”

According to Hayes, Løs Sundays will put much of the financing toward marketing and distribution support. To date, much of its marketing strategy has focused on social media campaigns, with a heavy focus on influencers. However, the company now wants to invest in digital ad campaigns and trade support.

Why did CircleUp get involved?

The announcement of Løs Sundays’ series A round marks the second time this week CircleUp has been involved in a financing round for a nationally distributed alcoholic beverage brand, following the announcement Tuesday of a $4 million raise for RTD mimosa maker Ohza.

According to CircleUp managing director Karen Howland, the timing of the investments is purely coincidental — the firm also led a $7 million Series A for baby food brand Serenity Kids this week — but they do reflect growth and innovation within the space.

“It does feel like the alcohol category is seeing a huge amount of innovation right now, led by the RTD category,” Howland said. “We’ve done a ton of work into the RTD category over the course of the past year, but the alcohol space is getting a good amount of innovation and we tend to go to the categories that are being innovated.”

Within spirits, Howland said tequila is the fastest growing category. She noted that spirits is an attractive space for investors as it’s “a very acquisitive category” in which many of the fastest growing spirits brands eventually exit to major strategics.

“The research that we did speaking to several of the large incumbents found that they are challenged as far as recognizing how to engage a younger demographic and how to engage authentically online with consumers,” she said. “Which when you think about what Løs Sundays does really well, and thinking about what the incumbents have all identified as weak spots in their own portfolios, it seemed to marry really well.”

CircleUp uses a proprietary data system called Helio to help guide its investment strategy, which Howland said led the firm to both Løs Sundays and Ohza. Løs Sundays, for example, ranked in the 97th percentile for social growth and engagement on Instagram out of more than 2,800 spirits brands monitored.

While spirits, and tequila in particular, has seen an influx of celebrity founders in recent years — including Dwayne Johnson, LeBron James and Kendall Jenner — Løs Sundays has managed to outperform the bulk of these brands in engagement, even when competitors beat them in terms of social media followers.

Editor’s Note: A previous version of this story incorrectly stated CircleUp’s role in the Series A round.