"Healthy" drinks brands are booming: How Olipop, Celsius, Liquid Death & co. have become worth billions

1. Peace out, performance. What’s up, Brand?!
2. A billion-dollar plus valuation
3. The dead rise again
4. The tip of the iceberg

Celsius, Olipop, Liquid Death, Not Beer. These brands are not only united by their N/A (non-alcoholic) status, but also by their AAA rating in the eyes of investors. So-called functional beverage brands that position themselves as "healthy thirst quenchers" are tapping into a seemingly never-ending well of funding, generating millions in revenue and notching billion-dollar valuations. Today, OMR is breaking down the business model to see why it’s succeeding despite a difficult economy.

US beverage brand Olipop is an eye catcher. Soft drinks, packed in colorful cans, vintage logo and graphics adorning the receptacles, evoke a sense of 50s nostalgia. Further helping it stand out: a recently released Barbie edition. Flavor: Peaches & Cream. What stands out even more than the striking design are its striking sales figures. In 2024, Olipop is aiming to generate revenue of over USD 400m—up from 250 million last year. Founder Ben Goodwin says his cans are stocked by 25,000 supermarkets and plugged year-round by celebrities such as Gwyneth Paltrow.

Paltrow and the Jonas Brothers, however, are not only fans; they’re also investors. So, too, have, major food investors, including the Boulder Food Group (which also has a stake in Athletic Greens). According to The Information, Olipop is now looking for a fresh injection of cash at a valuation of USD 800m. Last time around, Olipop is reported to have been valued at USD 200m. Olipop and other new beverage brands would seem to be booming.

Peace out, performance. What’s up, Brand?!

Stateside, sales figures for N/A beverages have increased by 30 percent in the past year alone. No wonder, then, that investors can’t seem to quench their thirst for functional beverage brands, i.e. energy and sports drinks. Basically anything without alcohol. Another selling-point for Olipop: it’s healthiness. Plastered on its cans are the words "Supports Digestive Health." Together with young beauty brands, FBB brands are bucking the current market trend and growing. Another unifying factor between both sectors is their shared marketing and sales strategy. They take to major social media platforms, where they build up a community, oftentimes engaging influencers and stars. Then they place their products in major supermarket and drugstore chains.

This development is also further evidence that the DTC model—all the rage just a couple of years before—has cooled considerably. Model DTC brands, like Warby Parker or Allbirds, who once ran performance ads to sell directly online are now faced with diminishing margins as customer acquisition costs (CAC) on those platforms have risen considerably since the mid-2010s. Thus, new consumer goods start-ups tend to focus more on branding and brand advertising, and adopting a “flood the market” type of approach, where their products are available everywhere. Olipop, for example, relies almost exclusively on influencer marketing, TV and out-of-home advertising for brand promotion. Purchases are then made in supermarkets.

A billion-dollar plus valuation

According to media reports, Olipop is currently profitable, but needs more capital to keep growing at the same clip. They currently offer 17 flavors, from cola, orange and lemon to banana cream and tropical punch. Liquid Death, craft water in a can, offers significantly fewer flavors, but is even more valuable. The US company sells sparkling water in beer cans and saw sales eclipse USD 130m in 2022 and had a valuation of USD 700m. Following a recent round of funding, Liquid Death is now reportedly valued at USD 1.4b.

We broke down Liquid Death’s strategy in detail back in 2022, but the abridged version is: the over-the-top personification of "Liquid Death" as a marketing message has used to great effect on social media. The slogan "Murder your thirst" features prominently, also in cartoon commercials, where water drinkers are executed by the mascot "The Executioner." All tongue in cheek, of course. The vibe plays well on Tiktok and Instagram, where Liquid Death is followed by over 5.3 million people on Tiktok and 3.3 million on Instagram.

The brand thus demonstrates the current market dynamics: strong branding works almost without additional marketing dollars and is sold in thousands of supermarkets at a high margin - after all, it is and remains water in cans. Current investors who believe in the concept include celebrities such as actor Josh Brolin and NFL player DeAndre Hopkins, as well as the entertainment group Live Nation, one of the largest concert promoters in the world. Liquid Death is already a water partner at many Live Nation concerts.

The dead rise again

However, Liquid Death and Olipop are not just two isolated examples of “healthy” drinks brands succeeding. Across the industry, Celsius probably has the most momentum. On the market since 2004, it’s spent over a decade living an absolutely niche existence in the energy drink business. In the early days, the company was constantly on the verge of bankruptcy. In 2015, Celsius shifted its marketing and image to focus on health and fitness. In 2017, Celsius Holdings went public and business has been booming since 2021. After generating annual sales of USD 300m in the early 2020s and USD 650m in 2022, sales shot up to USD 1.3b in 2023.

"The Celsius brand and products were born in the gym and fitness channel, and we've kept hold to our roots in this area," says Celsius CEO John Fieldly. "I think this is why consumers have gravitated to our brand so much; they see that we're authentic to our core and continue to support the fit lifestyle culture," he said. Part of the growth can certainly be attributed to a growing number of people paying more attention to their health and fitness. And many consumers seem likely to buy Celsius because they feel they are drinking a healthier energy drink compared to competitors.

Celsius has also strengthened its brand digitally, primarily through sponsorships and influencer deals. The company is a sponsor pf the Ferrari Formula 1 team, had its own party area at the Coachella festival, which attracted lots of celebrities, and partners with footballers, ice hockey players and extreme athletes. All of this is reminiscent—albeit on a much smaller scale—of the strategy successfully employed by Red Bull.

The tip of the iceberg

The sales figures of such new functional beverage brands are no longer just a source of desire for investors. The large corporations could ensure consolidation. In 2022, Pepsi invested USD 550m in Celsius for 8.5% of the shares. Two years prior, the company bought Rockstar Energy for over USD 3.8b. Coca Cola has also invested in the sector, acquiring Vitaminwater for USD 4.1b back in 2007. These two players alone are likely to be keeping a very close eye on the newcomers.

At the same time, other brands are already popping up. In the US, for example, "Not Beer" is getting in the craft water game and sells water in cans that are decidedly reminiscent of Budweiser beer. The company has already raised USD 1.9m from angel investors before launch.

However, it’s not all smooth sailing. Prime Hydration, the beverage brand created by US Youtubers Logan Paul and KSI, has had a rough go lately, which shows how difficult it can be to sustain hype created by influencers in the long term. While the product was initially in such demand that some people resold individual bottles for three or even four-figure sums, Prime Hydration sales are said to have slumped by 50 percent in 2024, according to data from the UK.