Liquid Death Co-Founder and CEO Mike Cessario joins Yahoo Finance Live to discuss the company's successful fundraising, building a strong brand, the outlook for growth in the beverage industry, and potentially exploring an IPO at some point.
MARTHA STEWART: Hi, I'm Martha Stewart. I recently heard about an interesting new beverage company called Liquid Death.
[METAL MUSIC PLAYING]
[HAPPY MUSIC PLAYING]
Don't worry, it's just water. And together we've teamed up to create an utterly delightful candle.
- Martha Stewart, just one of many celebrities endorsing this out of the box, or in this case bottle, water brand. Joining me now to discuss what sets this business apart is Mike Cessario, Liquid Death co-founder and CEO, also Yahoo Finance's own Brooke DiPalma joining us, as well. Mike, good to see you.
This is a phenomenal story. Your latest raise values the company at $700 million. I can't help but think if you'd have walked into Shark Tank in 2019 trying to sell water in a can, how would they have reacted, and what's the origin story?
MIKE CESSARIO: Yeah, I mean, I think people forget two things. One, how big the beverage industry really is, and two, how much brand actually plays a role in it. I think when you look at other industries, like fashion, for example, people can understand somehow easier why does a Gucci t-shirt that's 100% cotton sell for $750, when the same exact t-shirt from the same exact material you can buy in target for $15.99. Same exact thing, performs the same exact function, but people can clearly understand why brand can completely change the value story for a given product. It just doesn't happen as much in CPG.
But yeah, essentially we're building a brand that's bigger than just water in a can. And I think that's why we've sold-- last year, we did $3 million in merch and apparel as a beverage company, as a water company. We've got 4 million followers on TikTok and Instagram, which the only two brands ahead of us are basically Monster and Red Bull. So when you really are building a brand, it's a very different thing than when you're just a very functional, rational, transactional based approach to a product.
- So Mike, let's break down some of those numbers there. In 2019, when you last spoke to us you raised a $1.6 million seed funding, recently raised $70 million Series D, like Dave said, now valued at $700 million valuation here. What's the end goal, and is it an IPO in the near future?
MIKE CESSARIO: Yeah, I mean, we don't have a specific goal in mind. I think we're open to all kinds of different paths for the company. I think IPO path is something we're definitely going to seriously explore and see what that looks like.
There's no timeline for when that would be or if we would definitely do it or not, but something we're going to take a look at. Same thing for remaining private, same thing for potential M&A. I think the company is just growing so fast, and growth is just continuing to move even faster, and we're going to take that into consideration when we think of what the next kind of move is.
- And when you look at pricing, when you go to buy on your website, it actually takes you to Amazon. So I want to talk a little bit about that pricing there. It's $15 to $21 for a 12-pack. The cost of non-alcoholic beverages up 0.6% month-over-month, 12.9% year-over-year. How are you keeping that price competitive to keep consumers coming back?
MIKE CESSARIO: Well, Amazon-- I mean Amazon's a tricky thing, because Amazon, they are a wholesaler. So they buy product from Liquid Death. Amazon sells it, and prices it. Just like they do with all the big brands, Coke, Pepsi, all the other brands, Amazon acts as a wholesaler.
So they typically set a price that is in line with what you could buy it for in a store which is $14.99, $15.99 sort of range, so that should stay intact. And yeah, at the end of the day, as long as we are somewhere in the range of other premium products, we're going to be fine. It's a dollar more, is it a dollar less, people aren't buying Liquid Death because it's the best priced thing, it's a brand play. And when you have a true brand, you have a little bit more pricing elasticity than when you're just a brand that's purely focused on, well, we're cheaper, so that's why we win.
- You mentioned the 4 million followers on TikTok and Instagram, 2 and 1/2 million of those on TikTok. Are you able to quantify how that impacts the bottom line? And you said that's not why they're buying it, if you can, why are they buying Liquid Death?
MIKE CESSARIO: You know, my question would be why do people wear Nike instead of Adidas? Same shoe. Why do people decide to drink Jack Daniel's over some other whiskey, when even in a blind taste test there's no way they're picking it out? You know, it's like there's these emotional reasons that people do things.
But I think with Liquid Death we're seeing that people appreciate a brand that feels authentic. And I think, doesn't matter what industry you're in, everybody's chasing authenticity. But people see Liquid Death and they know, oh, there's a real human being behind this.
And in a category where people perceive everything is kind of the same, it's like hey I'd rather give my $1.89 to these guys, and walk around with this cool can that's not a plastic bottle. Aluminum is infinitely recyclable, so they feel good about that. And people get a kick out of walking around with something that looks like a beer. We have hundreds of parents who have reached out on socials saying, thank you, finally, my nine-year-old is excited to drink water instead of soda, just because of the format. And it feels like something cool or that he's not supposed to have. So I think there's a lot of different reasons why people are really into the brand.
- We get it now. Mike Cessario, cheers to you. Brook DiPalma, thanks for being here. Bravo on your success.
MIKE CESSARIO: Cheers.
- And best of luck to you in the future, sir. Mike Cessario, Liquid Death founder and CEO. All right we're--