As it looks to scale up to meet fast-rising demand for new innovations, Liquid Death announced this morning it has closed a $67 million funding round at a valuation of $1.4 billion.
The financing adds to the more than $200.6 million the better-for-you beverage maker has raised since 2019, while the new valuation is double the $700 million valuation it touted following its Series D round closed in 2022.
This latest round features investments from several distributors, including the “No. 1 distributors in North Carolina, Oregon, Utah, and Washington,” among others.
According to Liquid Death founder and CEO Mike Cessario, having the distributors invested in the brand was an important step towards strengthening the brands relationship with its top DSD partners. While he declined to name any specific companies involved in the financing, he said that eight of the brand’s top 10 distributors are among the investors.
Cessario noted that having a “shared alignment” with its distributors was important for the business, particularly in an industry where DSD houses frequently invest heavily into building beverages from the ground up only to be left with a large vacancy when a brand exits to a strategic.
“We’re really making them feel like they truly are an extension of our company,” he said. “We want to bring them in and have them more involved in every way because it’s so critical to have a shared alignment with them.”
As well, he suggested that having distributors at the cap table also sends a confident message to other investors about the strength of Liquid Death, as distributors “really know what’s working” on shelf.
Beyond DSD partners, a new institutional investor – SuRo Capital – has joined the brand’s cap table alongside follow-on investments from existing partners Live Nation, Science, Inc., and Gray’s Creek Capital Partners. SuRo is a publicly traded investment firm.
Several celebrity investors also joined in the raise: actor Josh Brolin, NFL star DeAndre Hopkins, Chapelle’s Show co-creator Neal Brennan, comedian Jim Jeffries, and Derrick Green, vocalist of the metal band Sepultura, all participated.
Building Around Innovation
The company reported that it brought in $263 million in retail sales last year, while it expanded its footprint to over 113,000 retail stores across the U.S. and the U.K. That growth has been bolstered by the expansion of its product portfolio beyond the water and sparkling water categories, launching last year a canned iced tea line and most recently adding a powdered hydration line called Death Dust.
Much of the new funding will now go towards supporting continued innovation and scaling. Last year marked a complete transition to total U.S. manufacturing for Liquid Death across all product lines, and Cessario said the company is now seeking to add new co-packing partners this year to both meet demand and increase efficiency in order to improve margins.
While the brand’s flagship still water in a can remains its top selling individual SKU, Cessario said that Liquid Death’s sparkling water and tea lines combined are now more than half of the business, and this year will see additional flavor extensions on both lines (several of which will be showcased this week at Natural Products Expo West in Anaheim, California).
With Death Dust, Liquid Death is now extending its portfolio beyond RTD. Cessario noted that powdered hydration products are the smallest category the brand has tackled to date, but he believes the brand is primed to stand out in a set that has already seen significant growth and disruption in recent years through the expansion of brands like Liquid I.V. and PRIME. However, he cautioned that the company views powders as an experimental space and isn’t anticipating the line to be as large out the gate as its past line extensions.
“Our liquid death model of ‘Go into a huge category where there’s not a ton of fun, irreverent brands, and we can be the one and really take share there,’ it’s lined up on that,” he said. “But we also kind of knew [this is a] small category, it’s not our plan that all of a sudden this is going to be as big as tea was in the first year. For us this was really like ‘Hey, we can kind of experiment pretty cheaply here.’”
The launch is already providing some lessons for the company. Liquid Death has now heavily discounted its first batch of Death Dust products by 40%, admitting it did not make the flavors strong enough. However, the flexibility of powders has allowed the company to quickly recover, Cessario suggested, and an improved version will be on shelves within 60 days.
“We’re never afraid to admit to people that we can continue to get this better,” he said. “I think people really appreciate that, because so many companies don’t ever admit it, like ‘Oh, we can do no wrong, everything we do is perfect.’ No, we’re human, like anyone else we’re learning, and we care.”
A Public Future?
The new financing follows rumors last summer that Liquid Death was exploring a potential IPO and had secured Goldman Sachs to help lead the process. Although Cessario had previously said the brand has considered going public as one option, there’s been little update on whether an IPO has made progress since July.
Cessario told BevNET today that the company wants to keep its options open while it focuses on getting the business to a position where it could confidently issue an IPO should they ultimately choose to.
“We’re not hyper-focused that this is one thing we’re going to do, we’re just focused on continuing to grow,” he said. “We just want to make sure that we’re in a position where we have options, so if we do decide that an IPO is right, that we have all the things in order that we would need to have that be an option and be successful. And likewise, with any other sort of partnership or option.”