After two years of plugging away at the hangover prevention beverage category, California-based startup The Plug is repositioning itself as a functional liver health brand as it prepares to expand in retail this year via a partnership with beverage incubator L.A. Libations.
The company is also in the process of raising a venture round which, according to co-founders Ray and Justin Kim, and has already attracted a number of new investors including private equity firm Blue Equity, Sanzo founder and CEO Sandro Roco, and Dream Pops founder and CEO David Greenfeld. Hayden Fulstone, co-founder of Liquid I.V. has joined the brand’s advisory board, the brothers added. The Plug previously closed a $1.5 million seed round last year, where rapper Jack Harlow, NBA player Myles Turner, and Scale.AI co-founder Lucy Guo participated among others.
The Plug makes a plant-based, 3.4 oz. health shot intended to help prevent hangovers after nights of heavy drinking. While the alcohol occasion remains significant for the brand with about 70% of consumers still using it for that original purpose, Ray Kim told BevNET that the brand has repositioned itself over the past year as a general wellness supplement promoting healthy liver function.
Because the ingredients in The Plug aid liver enzymes in converting toxins into acetic acid, Kim said the drink serves as a natural liver detox and can be consumed regularly to prevent fatty liver disease, which if untreated can turn into cirrhosis. Kim admitted he and his brother, co-founder and COO Justin Kim, only “stumbled upon” this new identity as a liver-focused wellness brand after data from the company’s Sam’s Club road show rollout showed consumers picking up the brand for daily use and non-alcohol occasions. But the realization gave The Plug new guidance on how to scale the company and drive adoption in what Kim calls a new emerging category for liver friendly products.
“We looked at a lot of our competitors and they all scaled horizontally in their brands’ messaging,” Kim said. “What I mean by that is they created a bunch of different product lines on energy, sleep, productivity, you name it. But that diluted their own overall brand’s initial messaging as a hangover recovery drink. For us, we wanted to go vertically deep, which is why it took us three years of R&D to come up with a liver supplement drink that doubles down whether you are consuming alcohol or taking care of your liver’s health.”
Currently available in around 1,200 retail locations nationwide, The Plug is now working with L.A. Libations through its SoCal Incubation Program (SIP) to grow its presence throughout the Golden State. L.A. Libations EVP Jacob Timony told BevNET that SIP has expanded its focus statewide to include the Bay Area and the company will use its relationships with around 30 small to mid-sized retail chains to expedite placement for The Plug and support the brand through field marketing.
“This is exactly the type of product that L.A. Libations wants to get behind and to utilize our relationships for the benefit of the consumer in an effort to clean up their diet and provide them with a functional, healthy, better-for-you option within this segment of the market,” Timony said, noting that the brand has established strong momentum online that he now hopes will translate into the brick-and-mortar space. “I think it’s a process of transitioning the audience and the fanbase that they’ve built online through their TikToks and social media platforms and cater to that same consumer in stores.”
Since October, The Plug has seen its direct-to-consumer run rate improve 6x, Kim said, and the company is growing on average 20% to 30% month over month. On Amazon, top line growth has increased 4x in the same period. Beyond the messaging around liver health, Kim said he believes The Plug is benefitting from multiple industry trends including rising interest in functional plant-based ingredients, a boost for Asian-inspired products and the rise in both alcohol consumption and health consciousness during the pandemic.
Many of those consumers are buying in bulk as well. The brand’s 48-pack, which sells for $205 online, currently makes up around 15% of direct-to-consumer revenue, he said, while the $384 96-pack is around 5%.
Kim said the company is now aiming to “work smarter” on its digital marketing strategies as it seeks to target two different sets of consumers and divide messaging between hangover prevention and daily wellness. The Plug re-implemented an SMS messaging campaign earlier this year which he said provided an 88x return on investment last month. The brand also employs a 30-person team of social media interns and also works with external contractors for social marketing.
In addition to its presence on ecommerce platforms like Faire and goPuff, The Plug is also working to build out a DSD network for brick-and-mortar distribution. The brand partnered with Hi Touch Distribution in California this spring and recently added an alcohol distributor in Michigan, Kim said. Through its relationship with goPuff The Plug also launched chainwide in BevMo! and other retail gains include Liquor Barn in Kentucky and Go Grocer in Illinois.
As The Plug now looks to expand offline, Kim said much of the incoming capital will go towards building inventory, marketing, offline retail rollouts, building our team, and launching new products.
“Since we’ve grown tremendously, we’re now ordering a 40 foot container almost every two to three weeks,” Kim said.
In August, The Plug will launch a new pill line of liver protection supplements. The pills will contain a similar formulation to the current beverage line up with additional ingredients such as turmeric, milk thistle and Vitamin B that the brand purposefully avoided in its beverage formulation in order to maintain its flavor profile. However, Kim admitted that this move will put it in tougher competition with existing liver supplements brands, necessitating a strong digital marketing push in order to stand out.
“We’re going to be introducing ourselves to the millions of turmeric users, vitamin B users and milk thistle users on the SEO marketing and digital ad side,” he said. “We’ve already experienced this growth without introducing ourselves to those core liver supplement users, so it’s getting exciting for us. We’re feeling the increased growth and demand on a daily basis, we’re just trying to keep up with it.”