After several years spent punching above its weight, Sanzo is adding some muscle.
Since launching in 2019, the New York-based flavored sparkling water startup has quickly found momentum within the hyper-competitive category thanks to its unique flavor set, which takes inspiration from popular Asian fruits and ingredients. On Monday, the company announced the closing of a $10 million Series A funding round led by CircleUp Growth Partners, and with participation from Convivialite Ventures, Semillero Partners, Gold House Ventures, Kaya Ventures, and former Coca-Cola Company chief growth officer Francisco Crespo.
For San Francisco-based CircleUp, the investment marks its first within the sparkling water space. The company uses a proprietary AI-driven platform, dubbed Helio, to identify funding targets within the healthy CPG market; its past investments include nutpods, Super Coffee, Koia, Liquid I.V. and Ohza, among others. Sanzo previously closed a $1.3 million funding round in August 2020.
By focusing on unique flavors — Lychee, Calamansi, Mango and, added just this month, Yuzu Ginger — while also delivering the zero-calorie, better-for-you credentials consumers expect from the sparkling water category, Sanzo has gained placement at over 2,000 locations nationwide. Despite thin margins and a threadbare team, founder and CEO Sandro Roco said the company has been able to drive growth efficiently through grit and hustle, emphasizing on-the-ground work with DSD partners — including LA Distribution (SoCal), Rainforest (New York City) and Good Stuff (NorCal) — to help cover gaps in inventory and staffing. That’s been supplemented by efforts to drive velocities online via D2C and digital retailers like Amazon, Weee! and Thrive Market. In direct-to-consumer, repeat purchase rates are over 30%, according to the company.
Backed by CircleUp’s strong background in analytics, Sanzo is set to continue its current approach of using data to guide targeted expansion into new markets and channels, while also turning up the pace on innovation. That means partnering with DSD houses in regions with large Asian-American communities, while simultaneously driving the product through select retailers including Whole Foods’ Northeast and Mid-Atlantic regions to reach sparkling water consumers seeking differentiated premium products.
The brand enjoyed a big boost in awareness when it landed a deal with Marvel Studios to feature characters from the film Shang Chi and the Legend of the Ten Rings on a set of limited edition cans in September 2021. The movie was one of the biggest box office hits of last year and a cultural touchstone for many in the Asian American community, but the brand’s performance in Whole Foods suggests Roco’s prediction of a wider audience is coming to fruition.
“Our velocities at Whole Foods are comparable to other really hot CSDs in the prebiotic space, in the probiotic space and the like,” he said. “The folks picking this up are not just Asian Americans — were actually crossing over or we call it bridging cultures.”
That focus on bridging cultures has deepened Sanzo’s connections within the entertainment industry: Shang Chi star Simu Liu joined the brand as an investor, and it also partnered with Disney to promote the release of the animated film Raya and the Last Dragon in March 2021. Next up is a LTO Lychee can tied to Disney and Pixar’s Turning Red, the directorial debut for Chinese-Canadian animator Domee Chi, set for release on streaming service Disney+ in March. Unlike with Shang Chi, this release will be available both in D2C and in some select retail partners. New investor Gold House Partners, an AAPI advocacy group with deep ties to artists and athletes, also provides a path towards further collaboration and cross-promotion.
“Our ability to partner with these creatives I think helps educate maybe the buyers, retailers, distribution partners that this is what’s happening in American culture and hopefully, as a beverage, we’re able to operate as that bridge,” Roco said. “And for sure, there’s obviously a brand awareness aspect where we want to kind of own the occasion of celebrating this massive wave of Asian American excellence that we don’t see really abating anytime soon. We’re just super excited to be part of that.”
As Sanzo has grown, Roco has embraced the opportunity to become a role model for young AAPI entrepreneurs and an example of how business and culture can be authentically and harmoniously integrated. Having seeded the product in QSR and food service accounts across New York City, Roco said that sense of responsibility heightened after he watched many of those urban businesses suffer in the wake of COVID-19. Meanwhile, the opportunity to collaborate with Disney on projects that highlight positive role models for the AAPI community — as well as offering opportunities for Asian-American talent in front of and behind the camera — is indicative of a broader interest that the company is hoping to tap into.
“Why I’m kind of vocal about this is that I think in the beginning, we kind of faced that cold start problem where, whether it’s investors, consumers, or buyers, I think people were still not really sure about it,” he said. “The questions were: is this niche? Will this only serve a certain population? Does it really have the scale factor? And so I think our goal is kind of showing our community and also the broader American populace that this is kind of for real. It’s here to stay, and it is worth investing in — not just dollars and cents but also time and attention.”