DELOCE, a California-based maker of ready-to-drink espresso martinis, announced last week that it has closed a $1.5 million series seed round led by Vice Ventures.
What is DELOCE?
Founded in 2019 by CEO Sean Zoka and CMO Keaton Moody, DELOCE makes a canned Espresso Martini made with 100% cold-pressed arabica espresso beans and premium vodka (11% ABV per 6.8 oz can). The product is available online for $42.99 per 8-pack and $59.99 per 12-pack.
According to Zoka, the concept was born during a particularly haggard round of golf following a late night on the town. The brand design is modeled after vintage Italian sports cars with aspects of modern art in order to create a sophisticated aesthetic blending “classic and contemporary” callouts, Moody said.
After a year of bootstrapping, DELOCE launched last month and is currently in about 80 stores in California, including Bristol Farms, as well as online direct-to-consumer.
With seed funding, DELOCE now plans to expand its footprint across the country, beginning with deeper distribution in California and Nevada before adding Arizona, Texas, New York, Florida and Rhode Island. The latter state, Zoka noted, indexes high in Google search trends for ‘espresso martini’.
DELOCE currently employs a head of sales, alcohol industry veteran Scott Thompson, and a VP of sales, Noah Lasky. Zoka said the company aims to hire a COO in the next six to 12 months.
Part of the funding will also go towards innovation, Moody said. The brand has several SKUs in development that are expected to launch in the near future.
What is Vice Ventures?
Vice Ventures is a New York-based seed-stage capital fund specializing in “good companies operating in so-called ‘bad’ industries,” including cannabis, alcohol, addiction recovery, esports, sextech and other socially “stigmatized” categories. DELOCE marks Vice Ventures’ second investment in the beverage space, having previously invested in CBD and relaxation brand Recess, as well as its first involvement with an alcohol brand.
According to the firm’s founder Catharine Dockery, Vice Ventures looked at numerous RTD alcoholic beverages before making an investment into DELOCE. Calling the brand a “breath of fresh air,” she highlighted the company’s use of “clean ingredient alcohol,” natural ingredients and its positioning as a caffeinated alcoholic beverage (recalling the popularity of Red Bull and vodka cocktails) as reasons for the investment.
When making investment decisions, Dockery said a key factor was “finding brands that can build a lasting consumer connection.” She noted that the benefits of each beverage investment need to be weighed against several of the most common challenges the industry poses, including a three-tier distribution system for alcohol, ongoing regulatory uncertainty around CBD and high shipping costs for direct-to-consumer sales. As well, finding differentiated products is important; she noted that the firm passed on the influx of hard seltzer startups in order to focus on the emerging hard coffee category.
“I think a lot of people actually expected us to go straight for RTD given the sudden rise of hard seltzers — exactly the sort of industry disruption that we target for potentially explosive returns,” Dockery told BevNET in an email. “However, to us, seltzers rapidly began to feel like an area where there was a massively crowded supply of undifferentiated products, including some incredibly well-distributed offerings from companies like [Anheuser-Busch InBev].”
Dockery also noted the beverage industry is particularly opportune for well-funded exits, noting that “nearly all” of the larger food and beverage conglomerates have been open in recent years to acquiring brands that “show promise for national distribution.”
“This is also one of the areas where we see acquisitions prove especially successful, because the benefits of scale in beverage are just so extreme,” she said. “Overall, though, we do find beverage to be a very exciting space, and one where we’re very well equipped to help our investments succeed in branding, marketing, distribution, or even [corporate development] conversations.”
How does DELOCE fit into the RTD alcohol market?
The hard coffee category has seen rising interest in the past year, both from investors and alcohol strategics. In summer 2019, Pabst Blue Ribbon launched a Hard Coffee (5% ABV), followed shortly after by a product from La Colombe Coffee Roasters (4.2% ABV), made in partnership with Molson Coors Beverage Company. In November 2020, Bomani Cold Buzz announced it had raised $3.5 million in an investment round featuring over 40 firms and individuals. Other brands in the space include Cafe Agave and Twelve5 Beverage Company’s REBEL Hard Coffee.
According to Zoka, the nascent hard coffee market saw five-digit growth (roughly 11,000%) between 2019 and 2020. But positioned as a martini, DELOCE also toes the line between hard coffee and more standard canned cocktails, a category expected to reach $1.63 billion by 2027 according to Grand View Research.
“I think we’ve done a really good job differentiating ourselves with our value proposition of instantly enjoyable and contemporary cocktails with sustainable, uplifting buzz,” Zok said. “We’re not just your average canned cocktail brand and we’re not just your average hard coffee brand. We’re making sure we cut through that white noise and communicate that value proposition.”