[00:00:10] Ray Latif: Hello, friends. I'm Ray Latif, and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. This episode features an interview with Ben Witte, the founder and CEO of Recess. Upon its much-hyped debut in 2019, Recess was dubbed by the press as the LaCroix of CBD. Although the brand got off to a hot start, the beverage industry cooled on CBD, the result of a challenging regulatory environment for products made with the cannabinoid. In 2021, Recess introduced Recess Mood, a new line of sparkling waters infused with magnesium and adaptogens and marketed as modern relaxation beverages. Leading with the tagline of calm, cool, collected, the products have become the primary driver of sales for the brand and represent the vision that founder and CEO Ben Witte said he always had for Recess, a platform of beverages intended to help people relax. The company later added mood powders to the mix and in 2022 launched a line of zero-proof mocktails, one that Ben describes as a natural extension of the brand. Recess has emerged from the pivot as a prime-time player that has sold in over 18,000 stores nationally and is one of the best-selling beverage brands on Amazon. It is mentioned and merchandised alongside the likes of high-profile drinks like Olipop, Poppi and Liquid Death. In the following interview, I spoke with Ben about how he navigated a shift toward a product mix that realizes his vision of a relaxation beverage platform how Recess built a thriving online business, how the company utilizes consumer feedback to support its sales and marketing efforts, and how it is preparing for a major expansion in brick-and-mortar retail. Hey folks, it's Ray with Taste Radio. Right now I'm honored to be sitting down with Ben Witte, the founder and CEO of Recess. Ben, great to see you.
[00:02:30] Liquid Death: Great to see you too. Excited for our conversation.
[00:02:32] Ray Latif: Yeah, absolutely. I should say great to see you again. We chatted last week and prior to that, we've chatted a few times. The first time we spoke was in 2019 for an episode of Taste Radio. Recess was three and a half months into its debut, I think, at that point, and we caught up in New York City at your office. You're based in L.A. now, though.
[00:02:53] Liquid Death: Yeah, that's right. It was a COVID move that lasted longer than expected.
[00:02:58] Ray Latif: Well, it's appropriate for your brand. LA is pretty chill. Recess is all about chill.
[00:03:04] Liquid Death: Exactly.
[00:03:05] Ray Latif: Yeah. You know, I look back to that time in 2019, this was about five and a half years ago. And I recall there was just so much hype about the brand at the time. It was one of the first times people had seen a CBD infused or a hemp infused beverage. Recess was considered the anchor of that emerging set. In fact, at the time, people were calling the brand the LaCroix of CBD. And it was a bit of a misnomer though, because the whole concept, the idea behind Recess was not specifically about CBD. Let's go back in time for a second and talk about the origins of the brand and how you envisioned it as a beverage company.
[00:03:52] Liquid Death: Yeah. First, my background, I didn't come from CPG, spent the first six years of my career in Silicon Valley, in the early stage tech startup world, got hooked on entrepreneurship and knew I wanted to start my own company, but also recognized my passions and strengths were better suited for the consumer space. I've always been more of a creative at heart. And so I kind of went out on my own in around 2016 to kind of explore different ideas. And that's when it started to feel to me like we were entering this new period in history driven by technology. And it was leaving everyone stressed out and anxious. You know, Trump had just been elected, which I kind of viewed as the ultimate expression of anxiety. And so I just had this high-level thesis that, you know, in the future that we were entering, you know, people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax, you know, as compared to things like alcohol or even tobacco, you know, or other kind of pre-existing kind of unhealthy forms of relaxation. You know, shortly thereafter, I observed the rise of CBD oil, adaptogenic herbs, you know, magnesium, nootropics, even THC, essentially this new class of functional ingredient that was primarily in supplement form that people were using to reduce stress, to feel calm and to relax. And kind of the light bulb moment was Red Bull for Relaxation. Basically view these emerging ingredients as the inputs into this entirely new space of consumer products that would deliver this value proposition of healthy relaxation. And I think that's an important distinction and insight in the sense that I really never viewed Recess Mood the space back then as the CBD beverage space. I would always say I've never heard anyone call Red Bull a caffeine company. It's an energy company. They were marketing the solution and not the ingredient and obviously built an entire kind of lifestyle brand to market the product to consumers. And so I took a very expansive view of what was going to emerge here that, again, I defined as the healthy relaxation product space and that it would be comprised of products across a number of formats, whether it's RTD beverages, powders, gummies, shots, that would also be kind of segmented by ingredient type and occasion, whether it's alcohol alternatives, stress relief, sleep. To me, these are all nuanced propositions within the broader relaxation space. I think that view of the space that was going to emerge over the years to come really drove our strategy, whether it was the original product line, which included CBD in it. But really, we leaned into marketing, the feeling of relaxation and defining the feeling as calm, cool, collected. instead of marketing the ingredients, and then ultimately building a lifestyle brand world around the beverage to connect with consumers. That's how I thought about the original opportunity for what became Recess. And I think that view of the broad space that was going to emerge really has driven our strategy over the past five years.
[00:07:13] Ray Latif: Certainly being the Red Bull of relaxation is very different than being the La Croix of CBD. And I agree with you, it's probably better to be the former than the latter. But to be fair, when Red Bull launched in the United States, I don't think many people had heard of the term energy drink. There were highly caffeinated beverages at the time, but Red Bull, in a sense, launched the category in the United States. Whereas I think relaxation beverages are interesting because there had been relaxation beverages prior to recess. I don't even know if you could call it a category, but there were a handful of products that came out. I mentioned the word chill. The brand that I think of when I think of relaxation beverages was Just Chill, which was on the market for a short amount of time.
[00:07:57] Liquid Death: Yeah. Look, I think so much of business overall, and especially in the CPG space, comes down to the timing. And I know Matt's bombing well, and he definitely did pioneer the concept of a relaxation beverage with just chill. But I believe he launched it in 2009 or 2010, and L-theanine was the only functional ingredient in there. And so I just don't think back then mental wellness, stress, anxiety were top of mind. for consumers, I think you really needed the world to get a little crazier, you know, over the over the next six years for it to be kind of a proposition that consumers would be interested in. In addition to that, I think you also I think that original kind of CBD wave in 2019, I think was useful, right, because it kind of established CBD and then also these other functional ingredients like L-theanine and adaptogens as functional ingredients that people were using, again, for this proposition of stress relief. And so we rode that original CBD wave in 2019, which helped establish the brand. But importantly, again, we were not marketing the ingredient. We were really focused on marketing the feeling, you know, again, that we defined it as calm, cool, collected. And so I think it was a combination of factors. You know, again, I think that 2018-2019 period was just a better moment in time to really launch and execute on a relaxation beverage. I think you needed additional ingredients besides just L-theanine to be able to infuse it to deliver that proposition. And then I also think our approach was the right approach in terms of the brand of recess, leaning into the idea of taking a recess, launching originally direct-to-consumer and then immediately moving into New York City, where we first established the retail business and the up and down the streets. up and down the street accounts there. And so I think, look, I think there's just a variety of factors at play that made when we launched kind of the right time to really establish this category.
[00:10:03] Ray Latif: I want to unpack a couple of things you said there. First of all, you said you never really focused on CBD as being the most important part or the focus of recess, but a lot of other people did. You know, whether it was the New York Times or People Magazine or what have you, everyone always associated one term with the other, CBD with recess. How hard was that to shed, especially once you got into 2020, 2021 and got into new categories like, you know, your mood beverages, which are enhanced with magnesium or your non-alcoholic cocktails? Do people still associate recess with CBD because of all that hype from the outset?
[00:10:42] Liquid Death: It was one of these things where I feel like the press and perhaps some distributors perceived us as a CBD beverage, but it was very clear to me that consumers were not. I think one of the most important things when you're building a consumer brand is to listen to your customers. And one of the things we always had was just a tremendous amount of user-generated content in Instagram at the time. And it was just obvious that people were not talking about recess as a CBD beverage. They were really leaning into the usage occasion of relaxing at the end of the day or in the afternoon and the feeling that we delivered. And so I do think there was this disconnect from how consumers thought about the brand and how it fit into their lives versus how the press thought about us, and perhaps how some distributors and retailers thought about us. Again, I just think from first principles here, again, why wouldn't they have called the energy drink category the caffeine category? I think there's a lot of parallels here. Energy drinks also have borine in them too. So they're really combining different functional ingredients together to deliver that stimulation effect, just like we combined different functional ingredients to deliver that relaxation effect. And so I've always believed that we were somewhat of a misunderstood brand from the earliest days. And so I think there's more to shake with, again, the press and distributors than with consumers.
[00:12:17] Ray Latif: Yeah, and I want to talk about brand building because, I mean, that was the first thing I noticed when I saw Recess was this was an amazing brand. Still is obviously an amazing brand, but from your packaging to the vibe to just the core of what the brand represented felt so novel. And in some ways it felt very specific. It felt like this was for a new type of consumer. It was for that younger type of consumer, the millennial brand, so to speak. It's grown beyond an age demographic, I would say. But, you know, talk about the idea of creating something that would resonate with a specific group at the outset and then be flexible enough to talk to other folks.
[00:13:06] Liquid Death: Yeah, I do believe in the importance of focus to begin. And I think, look, there's two additional insights, I think unique insights at the time besides just the premise of a relaxation drink. Back in 2018, Having come from Silicon Valley and the tech world, I was really shocked that no one was talking about both e-commerce as an initial distribution channel and also the opportunity to leverage social media, at the time just Instagram and Facebook, for digital brand building. And so we launched the company out of my apartment, direct-to-consumer. And I think we were one of the first true digitally native beverage brands. And we really focused on our Instagram strategy to begin and created this pretty compelling brand world in Instagram that clearly connected with consumers and got a lot of virality to it. And so that helped put us on the map And then we moved into New York as our first retail market. And we were really focused to begin on the creative community in New York. And I do think there's a lot of benefits to going deep first before you expand. And that's what we really did our first year in New York City. We had a pop-up in New York called Recess IRL, which was quite impactful.
[00:14:30] Ray Latif: Love that place. I visited and I felt like I was in, I don't know, some sort of magical room, but well, it was more than just a room, but it was, uh, it was very different than any kind of IRL experience I had seen before.
[00:14:45] Liquid Death: Yeah. And I, one of my beliefs is like being unique is very underappreciated in the CPG world. Right.
[00:14:51] Ray Latif: I think it's very hard to, very hard to be on.
[00:14:54] Liquid Death: Yeah. Yeah, being unique is how you break through and how you ultimately create value. There's a lot of me too brands. And if you're just basically acting like everyone else, you're just going to not be able to break through. And so we were really focused on thinking differently, thinking from first principles, being willing to reject the conventional wisdom when it made sense. And that's what I think, again, helped put us on the map that this first 12 months
[00:15:25] Ben Witte: Vibrant Ingredients is the natural ingredient partner powering food and beverage innovation, delivering flavor, function, and protection through a science-backed portfolio. Vibrant delivers purpose-driven solutions that help brands create extraordinary experiences. Discover what's possible with Vibrant today. Visit vibrantingredients.com.
[00:15:52] Ray Latif: digitally native brand, I think of another digitally native brand and I'm not picking on them, but they haven't done as well as Recess. They haven't, they weren't able to scale in the same way that Recess was, and that was Dirty Lemon. You know, what did you do right? In your mind, what did you do right from a digital perspective that helped you get to a place where you are now, where you're still doing quite well digitally? I mean, when we spoke last, I think you said it's over 50% of your business is online at this point.
[00:16:17] Liquid Death: Yeah, look, I think Dirty Lemon thought about themselves as a pure kind of direct-to-consumer brand. When I never viewed ourselves as a direct-to-consumer brand, I viewed it as a digitally native omnichannel brand, right, where you'd want to kind of establish the brand awareness and drive trial, you know, with consumers online before you went offline, right? And so I think that the simple kind of distinction of thinking of ourselves as an omnichannel brand, not a direct-to-consumer brand was the right approach. Obviously, beverages are unique in the sense that beverages get more distribution than literally any other product on earth. Why is Coca-Cola the biggest brand in the world? Well, it's because it's always around you. And I think that's beverages that succeed ultimately get to scale offline. But I think there are significant benefits to also having a strong eCommerce business as well that I can talk about.
[00:17:15] Ray Latif: Yeah, I want to get to that and how you've been able to create such demand on platforms like Amazon. But I do want to back up for a sec because in 2019 and probably a little bit into 2020, I think the idea, the concept that you had was still a bit of a thesis, you know, proving the concept. identifying the trends that you could say and point to as, yes, this is proving out my belief that relaxation can be a big category, can be the next big beverage trend, happened after that. How did you go about proving out your thesis in so many ways?
[00:17:54] Liquid Death: Yeah. Look, it was obviously a thesis that I had before we launched it. But to me, within a few weeks, it was pretty clear that the idea was connecting with consumers in the way we intended it to. And again, I just would always, I really believe looking at your user-generated content and really tracking how consumers talk about your brand in social media is the most valuable data and set of insights that you can have. And so again, within short order, it was just very clear to me that people were drinking Recess Mood relax and unwind, which is really this fundamentally new value proposition. I think back then it started to become clear that mental well-being was this kind of health outcome that consumers were increasingly adjusting their lifestyle around. Back then you started to see the rise of things like therapy or mindfulness, which had gone from very taboo to talk about to very accepted to talk about. And so what I believed is that that idea would make its way into the products that we consume. I would also cite products like Calm Magnesium Powder. Calm Magnesium Powder was a brand that was owned by Clorox. That was, I think at the time, a $100 million a year business. The insight that drove Recess Mood was people were drinking the original version of recess and calm magnesium powder for the exact same reason, to feel calm. And that's what inspired me to go explore magnesium and also explore powders. And so I think connecting dots is very important. And back then, that was definitely not showing up in the spins data. That was more looking at you know, these other things that were happening, you know, broadly in society, right, that kind of helped validate, you know, my thesis. You know, one of our taglines is an antidote to modern times, that premise that, you know, like I shared at the beginning, that we were entering increasingly stressful times as a result of a rapidly changing world. And people would be looking for, you know, various solutions to help them, you know, reduce stress and relax. Right. And so I was just, always deeply believe in the vision that me and the team had here. And that every day that went by, we're getting validation of that. And so I think having conviction is very important. And then one of my favorite lines is this Jeff Bezos line. He said, basically, to do anything truly innovative, you have to be willing to be misunderstood for long periods of time. And that's how I feel the recess story has been to an extent. You look at the bet we made on magnesium in 2020. No one was talking about magnesium at the time. And to me, it was a secret hidden in plain sight. Just look at the brand call. That's all you had to do. And so I think it's identifying unique insights before they're obvious to the market. I think is fundamentally the job of the entrepreneur, right? Because if it's, you know, obvious, then it's probably already established, and, you know, everyone's doing it, and you're not going to be, you know, unique and differentiated enough to build something, you know, truly valuable. That said, look, I think there's two different business plans, you know, in CPG, you can either go into an existing category that's established and try and capture market share, you know, like Prime did, for example, in, you know, the sports drink space, and many other examples of that. Or you can lead the development of a new space or a subcategory within an existing space like Liquid Death did, within water with kind of a unique dimension and chance to begin, but ultimately, it was very much a brand play. So I really encourage, I really believe in the importance of figuring out what is your unique insights that you have that's going to ultimately drive your strategy and your brand positioning, and really, really lean into those.
[00:21:59] Ray Latif: How did consumers perceive, you know, a magnesium-enhanced beverage or magnesium-infused beverage? And think about it not just as like some sort of OM functional product, but as something that they could incorporate into their daily lifestyles.
[00:22:14] Liquid Death: Yeah, taking a step back, I always had the vision that Recess Mood become a brand platform. And I did have a view that I think platform brands would be a bigger and bigger part of the future. And I use this simple example that our URL on our Instagram was take a recess, not drink recess.
[00:22:32] Ray Latif: Right.
[00:22:33] Liquid Death: As the vision was there would be lots of many forms of recess that we could create over time. And what really accelerated the vision of becoming a platform was ultimately the lack of regulatory clarity on a federal level for CBD, which prevented us from entering the national retailers and Amazon. So we had this, I'd say, a business challenge in the sense that we had a product that consumers loved and was working online and at retail, but we couldn't scale it into the places where, frankly, 95% of the volume comes from, which is the big box retailers and Amazon. And so, fortunately, I think I had the right view of the space and thinking of it as the relaxation space and thinking of Recess as a relaxation brand and kind of accelerated, again, the platform vision with the launch of Recess Mood, which was fully compliant on a federal level and allowed us to enter the national retailers. You know, with that said, look, it took time. You know, we first had to, again, validate, you know, with consumers that they valued the idea and that we delivered, you know, the same, if not better, efficacy in some ways. I actually think magnesium is more efficacious than CBD. And then, you know, also have the right positioning. In retrospect, it was obvious to pivot beyond CBD, and many of the other CBD companies did, but many of them pivoted into Unity at the time, because that was the hot thing because of COVID. But our vision was to continue to build Resus as a relaxation brand. And look, it was just one foot in front of the other. First launch it online, then launch it in retail, originally in the independent accounts. And then we started to get into some regional chains. the national retailers. And ultimately, the most important metric in beverage is your retail sales velocity. And those were always strong for us. And so over time, we just had a data story to be able to continue to share with buyers and they started to pay attention. to their recess brand. And then they understood the trends around that people that were shopping in their stores, you know, were struggling with mental health. And they were looking, again, looking for healthier ways to reduce stress, relax, and kind of moderate their alcohol consumption. And I think it was almost a situation where the consumer was ahead of the market. And we really kind of met the consumer, you know, where they are and have the right approach from a brand positioning standpoint and a formulation standpoint. And it's obviously really starting to take off.
[00:25:09] Ray Latif: I feel like that data story becomes a lot stronger when you are or getting prime placement for the brand. And prime placement these days means being aligned with or next to fast-growing brands like a Poppy, an Olipop, even a Liquid Death, where I do see recess. I mean, if I go into any mainstream retailer or natural retailer, I start to see like they're all together, which is kind of surprising. I mean, how did you convince or did you have to convince retail buyers that merchandising recess next to or near these other brands was the right idea?
[00:25:50] Liquid Death: Yeah, look, I think we are extremely complementary to poppy and lollipop. We're definitely not competitors. Those are fundamentally kind of healthy soda brands first and probiotic soda brands second, in my opinion. And we're a relaxation brand. And one of the behaviors we often see is that a consumer will grab a poppy or lollipop and recess in the same store visit. And the consumer behavior is they're going to drink their popular Ollipop maybe at lunch or during the day. And they'll enjoy their recess in the evening instead of a glass of wine. So we really view them as complementary brands to us with a very similar customer profile. So we really love being next to them. Another point is I think it's somewhat overstated that you need an established category to exist. Obviously, there wasn't a relaxation or mood enhancement category in the beverage section at retail. There was in the supplement section with brands like Palm and Olly Gummies, but there wasn't in the beverage section. But just like there wasn't a healthy soda section, right? When Poppy and Lollipop launched, they really took space from kombucha. Beverage sales and merchandising is like kind of hand-to-hand combat, right? We have a field sales team, they're going into stores every single day and you're kind of fighting for space. And I think the categories are you know, broader than I think it's conventional wisdom. You know, oftentimes we're in, you know, that's the broad functional beverage set or the enhanced water set. Right. And obviously Recess Mood kind of fits both of those definitions. So those are, I'd say factors that really led us to, you know, for that line to be merchandised next to poppy and all that pop, which again, we love and we respect those brands that view them as ultimately complimentary brands, not competitive brands.
[00:27:39] Ray Latif: I like that you brought up usage occasion. You had already, but you brought up recess as Recess Mood as a potentially evening beverage for folks. I mean, I would drink a Recess Mood with my lunch. I mean, I could have that just as easily as a sparkling water or a better for you soda. But when I think about that evening occasion, I do think that your non-alcohol, your mocktails are probably what I would reach for first. Did you, when you were building out the platform, did you think about that daytime occasion, that evening occasion, as much as you did, Hey, I'm trying to create a platform that can fit the term relaxation holistically?
[00:28:18] Liquid Death: Yeah, but so let's just start with like, what is the definition of relaxation? Some people think of relaxation is like sitting on the couch, right, and chilling out like that. But the definition of relaxation is, you know, being free from tension and anxiety. I think one of the unique insights is that many occasions for alcohol are fundamentally about relaxation. When you're trying to relax at the end of the day, traditionally, people would often turn to a glass of wine to enjoy before dinner, with dinner, or after dinner to relax, unwind, and take the edge off. But even on a weekend with friends when you're hanging in the park, you're also looking to relax and unwind in a slightly nuanced way compared to a weeknight. And so I do think of the world, I'm a really big believer in the importance of honing in on specific usage occasions and day parts. And that's really kind of driven our strategy. Um, I can maybe talk about kind of what inspired the mocktail line, if that would be beneficial.
[00:29:24] Ray Latif: If you can talk about it while I sip on one of them, yes, you can do that. Cause I have already sipped on your Island Spritz variety, which is a relatively new variety. And this is, And to be clear, this is called Recess Zero Proof. It's described as a craft mocktail. This one is infused with guayusa and adaptogens. It's lightly sparkling, obviously 0% ABV. So yes, Ben, have at it while I enjoy, relax with my craft mocktail here.
[00:29:51] Liquid Death: Yeah, so like shortly after we launched, you know, Recess Mood, and we had already identified as kind of evening relaxation as kind of the primary usage occasion. But again, people were also drinking it, you know, during the day, whether it's in the afternoon, instead of a coffee or, you know, at lunch. But I really, you know, started to see, you know, the not that kind of alcohol alternative space, and, you know, alcohol moderation, as a movement kind of begin to accelerate. And it was really driven by Athletic Brewing, again, during COVID back in that kind of 2020 era. And I developed a very simple mental model, which was, at the end of the day, non-alcoholic beer sits on the other side of alcoholic beer, right? And alcoholic beer sales, I think, were beginning to decline at that time. And so my insight was, At the end of the day, non-alcoholic beer is fighting for share of a shrinking pie, right? And where was alcoholic sales kind of shifting to? It was hard seltzer and ready-to-drink cocktails driven by brands like White Claw, High Noon, Cup Water, Topo Chico, increasingly. And so my insight was that just like Athletic Brewing sits on the other side of alcoholic beer, there would be an RTD mocktail category that sat on the other side of RTD cocktails. You already started to see brands like Kin and Ghia and other brands like that that were more positioned as elixirs, euphorics, social tonics. But I saw the opportunity for us to lean into recreating the most popular cocktail flavors, like a margarita, like a pluma, like a mule, like a mojito, like now a Cosmo, but without the alcohol and enhance the functional ingredients that deliver a balanced buzz, some of the good parts of the feeling that alcohol can deliver but without the consequences. I think one of the reasons non-op beer has been so successful is it's a very simple idea to understand, right? It's beer without the alcohol. And I think our mocktail line is the same. It's a very clear brand positioning and value proposition, again, in the sense that we're recreating the most popular cocktail flavors, again, but without the alcohol. And so we first tried to experiment with that in 2021, where we launched a limited edition recess margarita as a part of our CBD linings, actually, for dry January. And it sold out immediately. And consumers were kind of obsessed with it. And I think there's something around familiarity, again, with consumers that's driven the success of non-alcohol beer, but also poppy and lollipop. Those are really recreating soda flavors in a better-for-you fashion. And so after that launch, I'm like, I really think there's going to be something here. We had just launched Recess Mood, so it was too early to really launch another product line. But I was confident that the RTD mock pill subcategory within the broader alcohol alternative space would emerge. And we started working on formulations over that year and launched that line, I believe it was 15 months ago or so. And it's already well over 30% of our sales. And we're by far the biggest alcohol alternative brand on Amazon. I'm pretty sure we're the biggest R&D, mocktail, elixir brand. We've taken account Amazon and retail and that product line is doing very well. But it fits us, you know, the way I think about it is it fits, you know, a distinct kind of usage occasion, you know, from Recess Mood, in addition to kind of evening, you know, relaxation, which is definitely an occasion for the mocktails, we see them playing in more kind of social occasions, you know, the places you would traditionally drink White Claw or High Noon, you know, whether that's at the park, the beach, the pool, dinner parties, you know, increasingly, you know, on premise festivals, places like that, you know, we're really seeing them, you know, do well in. And one of my beliefs is, I've never liked the term sober curious, you know, for example, because I think the much, much bigger trend is moderation, not elimination. Right. I think there is a growing segment of people that's obviously not drinking at all. But I think a much, much bigger market is that people looking to drink less, fewer nights per week and then fewer drinks per night. Right. So one of the behaviors that we see is this kind of switch off effect. where if you're at the pool with friends, people have their high news and recess mocktails and kind of switch off in between. Right. So they're not getting out of control Amanda Huang over the next day. And so those are kind of the occasions where mocktails are really focused on playing in.
[00:34:33] Ray Latif: Yeah, the term I heard a long time ago is flex sober. I don't know if sober is the right word for it, but yeah, switching off, going between one beverage and the other and trying to find some sort of balance more than one extreme or the other. You know, I think one of the things that really amazed me about the Zero Proof line, the Mocktail line, is that they just taste amazing. You guys just really nailed the flavor. This Island Spritz in particular, I mentioned this in a past episode of the podcast, has that pina colada vibe that is the complete opposite of that, you know, saccharine, overly sweet product. This is very refreshing and has so much flavor attached to it. And then I wonder, you know, especially for a line like this, where it's already 30% of your business, only 15 months old, how you got people to try this, especially when a lot of your business is still online. Talk about the trial strategy for both Mood and the Moxhill line.
[00:35:33] Liquid Death: While 50% of our sales are still online, we are in about 18,000 retailers. Over the past 18 months, we've moved into Target, Albertsons, Wegmans, H-E-B, Fresh Market, CBS, many of the biggest retailers where we're seeing just incredibly strong performance. And one of the things we're seeing at retail is retailers bringing in multiple product lines. A retailer like Wegmans has all three product lines, Recess Mood, The Powders, and The Mocktails. HEB, same thing. Recess Mood just went national at Albertsons Safeway across all banners, and many of those divisions also have The Mocktails. There's many other retailers where that's the case. And so I think, you know, one of my beliefs and I think our competitive advantage is the benefits of this platform strategy. You know, we have an established kind of distribution network. We have an established kind of retail base. We have an established kind of digital presence, whether it's, you know, in social media or email lists, kind of our Amazon business. And so when we launch a product now, you know, it grows rapidly. I think it took the recess mocktails three months to get to the same scale in the national channel as it took Recess Mood 18 months. So we were basically able to very, very quickly get it into most doors that the Recess Mood line was already in. Right. Which I think is, again, a testament to the power of a brand platform. And so I think there's a variety of ways we drive trial, again, whether it's online or being able to enter the retail market quickly with them. But it's really exciting to see how the platform strategy is really working.
[00:37:19] Ray Latif: Yeah. And again, You know, your consumers are telling you they like it. They post pictures of it and videos of it online. They talk about how much they love the flavor or the function, the fact that they can, you know, replace their alcoholic beverage in the case of the mocktails with a recess. And you're following all that, but as consumers evolve, so does their interaction with a brand. From 2019 to 2024, how has that interaction changed? How has your communication with consumers evolved and how have you adjusted your social media and marketing strategy overall, you know, to better talk to people who are buying your product?
[00:38:02] Liquid Death: Yeah. I think 2019, we're really more focused on traditional brand marketing to really just establish the brand originally in New York City, both with our content strategy, our pop-up and different collaborations that we did. But once COVID came, and we really shifted more towards purely online business for a period of time, because New York City emptied out. The past couple of years, we've really been focused almost exclusively on performance marketing to drive the eCommerce business. And that's why I'm such a big believer in the power of having a scalable and profitable eCommerce business, which we do, which is all of the media that we're spending to drive our Amazon business. also benefits retail. So we're generating 10s of millions of impressions a month online to drive our Amazon business, which is profitable. And those impressions also benefit retail. And so I have this... One of my frameworks is In beverage, one of the important metrics is basically, how can you generate the most amount of impactful brand impressions for the least amount of money? If you have a ROI-positive e-commerce business, and the campaigns that you're running to drive it are generating return on investment, well, that money is paying for itself. Right. And so it's kind of those are impressions that we're able to generate on an ongoing basis that also benefit retail. And so that's a kind of a secret, you know, not a secret. There's other brands that think this way, too, like a poppy or Liquid Death to an extent. But we've really not done much brand marketing in the past couple years. And we're excited to turn that back on, probably starting next year, now that our retail business is getting to a scale where it really makes sense. But I'd say that really the focus for the past few years has been ROI positive performance marketing.
[00:40:03] Ray Latif: It sounds like you've spent quite a bit or you continue to spend quite a bit on digital ads and getting that right is something that I think a lot of brands have a hard time doing. A lot of founders talk about this is, you know, how do I invest my resources online to get the biggest bang for my buck, to get that ROI that you were talking about. What's really clicked for Recess from a digital ads perspective?
[00:40:26] Liquid Death: I've mentioned that we get just a tremendous amount of organic testimonials from consumers within social media. One of the things we do is we'll re-engage these people and ask them if we can use their video as a paid asset through Instagram or TikTok, or we'll reach out to people that we think could be a great fit for the brand and collaborate. on a video that we then run media behind. I find that to be just a very powerful and impactful form of media and advertising that really moves the needle. And again, I'm always thinking about what are things we can do that can benefit both the Ecommerce business and the retail business? How can you get this kind of more bang for your buck? And I think that's a great example of that. I think having your own channels are really important. I think we have something like 170,000 persons in the email list now. So just being able to have that channel to engage with our customers is very powerful. We have 125,000 Instagram followers. I think those are important, even though I think I do think Instagram was much more impactful. It was easier to break through Instagram back in 2018 and 2019 than it is today. I do think the strategy that we executed on back then is not necessarily the strategy that would work well today. The world does change and you really have to develop a unique strategy for the moment in time that we're in. The world's now shifted to more of a short-form video-oriented world. versus static Instagram posts, which is how we architected the brand. And so there's obviously an evolution that is ongoing that I think we will continue to invest in. But ultimately, I think viewing everything holistically, it's not one thing that's going to solve your problem or move the needles. It's really all these things together. And we haven't even used Celebrity yet. There's so many things we haven't even activated yet that I think are big opportunities for us in the future that we've just been waiting to get to a scale at retail where that makes sense. And now that we're in many of the major retailers and entering more in the second half of this year and expanding in many of them. I'm excited to really expand the brand world and really turn up brand marketing in a thoughtful way. We're not going to go crazy like Liquid Death House, for example, but I think there's a lot we can do that will move the needle in a positive way.
[00:42:54] Ray Latif: You haven't activated Celebrity yet. Anything you want to reveal or chat about yet? Nothing yet.
[00:43:00] Liquid Death: I mean, we've had, you know, all the record labels and talent agencies kind of trying to pair people with us, you know, over the years, I do think. I do think celebrities, obviously, there's 100 celebrity tequila brands and alcohol brands. I think increasingly, there's a number of them that want to be associated with other types of products and benefits around, again, mental wellness, alcohol moderation, stress relief. I think those are things that a certain segment of talent and celebrity wants to be associated with that's organic and natural to them that they want to be advocates for. So I'm excited to ultimately figure out what makes sense for us.
[00:43:41] Ray Latif: We've been flying by, Ben. I feel, I can't believe that we're almost at the end of our time here, but I got to ask one more question. That's about growing up from here, right? Like you've built a strong brand. You've proven out your model in so many ways. You still have a ways to go. And I think, you know, you would even admit that, but. When it comes to going from a brand where 50% of your sales are still online to one where a solid majority of your sales are coming from brick and mortar, that's a big change for a brand. You know, going from click and fulfill to doing the blocking and tackling that, you know, it requires to be in retail. You know, how do you prepare yourself for that? Especially when I know you do want more of your sales to eventually come from brick and mortar.
[00:44:26] Liquid Death: Yeah, look, I think it's about building out the team, right, both kind of the infrastructure on the supply chain, you know, and finance, too, I think are very important to manage, you know, a true omnichannel business and, you know, working with many, many types of, you know, distributors, whether it's, you know, the national distributors, you know, buying Kheat, you know, or DSD distributors, and then importantly, field sales teams. We have a 20-person field sales team right now. We need to expand that pretty dramatically to support the authorizations that we have coming down the line. I think that's why beverages are known as one of the most challenging categories is because it requires the largest sales team to support. They're just very high-velocity products relative to other categories like personal care or condiments. And so your team really needs to be going to the store every week to get reorders, to get displays and end caps and focus on merchandising. And so, yeah, it's really about continuing to develop the organization to support the ongoing growth of the business. I mean, we doubled last year, we'll double again this year. And I think we have the ability to just basically double every year from here. And so that requires kind of an ongoing kind of maturing organization to be able to support that. And so I'm fortunate to have a team and an executive team that we've all worked together since 2019. It's about a 40 person team right now that's working incredibly hard to support the growth that we see in this year. It's really going to be about continuing to build out the team to support what's coming down the line. But the most important thing is we're seeing great results. When we get on shelf, we sell extremely well. And that's the most important thing that you want to see. And overall, I think Look, I think we're in basically year five or six of the development of this broad relaxation space. And I think it's going to compound for the next 25 years, just like Energy Drinks has over the past 30 years. And I think we're just kind of getting started. And I think the broader space is too. I think there's a lot of brands. the different segments that we're playing in that I respect and admire. And I think this is a rising tide, we'll lift all boats type of situation. So I'm also excited to collaborate with other brands in the space to continue to drive this space at retail. For sure.
[00:46:58] Ray Latif: When we spoke last week, I had said, Ben, you don't look like you've aged a day since we first spoke in 2019. And typically in the beverage industry, you know, every year you age five years. So you seem to be doing pretty well for yourself, at least from a physical standpoint. Mentally, I hope it's just the same as well. But, you know, if you are looking at this as a 25-year build-out for a brand, I can imagine how you're taking it slow and steady one day at a time.
[00:47:28] Liquid Death: Yeah, I might not appear that way, but no, it's definitely been a journey. And it's been very stressful at times, but I'm super proud of what we've built and the progress that we've made. And I think the smart bets that we've made too. I think we made a couple of really smart bets that are beginning to pay off. And I'm excited for all that lies ahead and really grateful for you to be along the journey too.
[00:47:54] Ray Latif: Yeah, I am as well. Thank you so much, Ben. Let's make sure that we're not five and a half years in between our next conversation for Taste Radio, because I see really great things for recess and I'm just so excited for you and the team. Thanks, Ben.
[00:48:07] Liquid Death: It's been a great conversation.
[00:48:09] Ray Latif: Thank you. That brings us to the end of this episode of Taste Radio. Thank you so much for listening. Taste Radio is a production of BevNET.com Incorporated. Our audio engineer for Taste Radio is Joe Cracci. Our technical director is Joshua Pratt, and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski, and our designer is Amanda Huang. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. Check us out on Instagram. Our handle is bevnettasteradio. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
[00:49:03] Liquid Death: you
