Liquid Death Fad or Fabulous?

"The world has been crying out for a water that refers to back sweat in its advertising, is mistakenly stocked on Tesco’s beer fixtures and takes design cues from Skeletor’s fever dreams" Alex Beckett, Director of Food and Drink, Mintel

?A few years ago, my wife and I discovered Liquid Death in the drinks aisle. Its packaging stood out and name was intriguing, so we bought it after verifying it would not actually kill us, only our thirst. At home, Liquid Death was not an instant hit: the kids and we drank it until finished, but did go out right away to replenish. But next LD came out with new flavors, and we each liked our own, making the brand always present in our household. In case you wonder, mine are Severed Lime, Mango Chainsaw and Berry it Alive.

This week, my friends Mark Ritson and Will Poskett published their very different take on Liquid Death. Marc decried it as the?'perfect pin up brand for a generation of marketers who define marketing as advertising'?and spend their careers ignoring the?'remaining 90% of our disciplines hinterland’. As y'all know, I agree with Mark that the marketing discipline does and should cover (at least) the 4Ps: product and price represent the value offering to the customer, while Place and Promotion make it easy to find and think about (see also physical and mental availability in the Ehrenberg-Bass world).

Mark is specifically ticked off by the 'lesson' many claim to see in Liquid Death: that marketing communication is so much more important than product. As y'all know, I wrote several articles on the power of product innovation, even showing that price promotions for small innovative brands yield permanent sales benefits. Communication is a 'weak force', while Product is a 'strong force' in driving sales. Your ads can lead the horse to water, but can't make it drink [Liquid Death]. As Mark puts it:

Shitty marketing can surely kill a great product, but without a successful, product even the best marketing does little other than speed its own demise.

Sarah Marsh at The Guardian concurs that " Despite not selling a particularly innovative product, the independently owned Liquid Death, founded in 2017, is valued at more than a billion dollars. Its global sales were worth $263m last year."

But is it really the case that "Liquid Death's fame shows how badly marketers neglect product'?

No, as Will elaborates in his piece, bottled water is not a category where we can expect to see major product innovations. I am still waiting for water that weights almost nothing when carrying,, so I can do my long runs carefree. Absent such breakthrough, product innovation will likely come from either adding ingredients (e.g. vitamins) or subtracting them ('pure' water). All of these have been tried by large and small beverage brands, with mixed success.

?What is left? Packaging, price, place and promotion. How does Liquid Death compare?

1) Packaging: standing out among competing waters, LD ditched the bottle and went straight for the aluminum can. Skulls and similar images resemble liquor brands rather than water brands. As to assortment, LD released product extensions via an Iced Tea range and new formats via ‘Death Dust’.?

2) Price: with its unique names and packaging, LD commands a price premium, but did not outprice niche competitors. In the US (Amazon, Walart), it sells for $10-12 for eight cans ,, in the UK (Tesco) at ￡5.50 for four 500ml still water cans . This 10 cents per fluid oz is higher than the 6 cents for Evian and Pellegrino, but lower than the 13 cents for Just Water or the 14 cents for Icelandic Glacial.

3) Place: distribution is key for a fast moving consumer good, and Liquid Death leverages its consumer pull and triple-digit growth to gain entry into Nisa, the Co-op and Tesco (UK) and all main distributors in the US (I counted Amazon, Hannaford, Kroger, Publix, Target and Walmart). Due to its packaging, it sometimes gets stacked in the beer aisle, consistent with its party positioning and helping to overcome the duopoly stronghold in nonalcoholic beverages. As Mike Cessario, the founder of Liquid Death explained on the?CMO uncensored podcast :

“The big beer brands, due to the American Liquor Laws, are only allowed to own 20% of their distrubtion network…so 80% of distribution is still owned by independent family owned distributors…and they are allowed to carry any brands they want”

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4) Promotion: kawabunga!

a) ?collaboration with Tony Hawk selling?skateboard decks printed with the legendary skater’s blood ?to raise money for charity.

b) paying a “witch” to go to the Super Bowl and hex one of the teams

c) supporting its fans in a community (100K Facebook fans in a few months)

d) integration in music festivals and extreme sports

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In sum, the real lesson from Liquid Death is that you can and should improve on all 4Ps, including Product. I share Mark's disappointment that many marketing teams show little interest in driving product innovation choices. Moreover, my research shows the importance of ongoing improvements once a new product is launched and customer data comes in - even financial markets need several months to adjust to such data (so long, efficient market hypothesis). But I disagree with Mark that Liquid Death failed to create much fame outside of an audience of marketers. Will turns to share of search, which is greater for LD than for Evian, Fuji or Volvic. Of course, we should discount the novelty effect (why search for a brand you know?) and the imperfect predictive power of share of search. Still, it is a clear indication of consumer interest in the brand:

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?Finally, let's not forget LD's sustainability credentials . As Megan Dorian, the founder of Orange PR and Marketing, puts it : "The combination of a memorable brand and a commitment to social responsibility makes it a compelling choice for the eco-conscious consumer."

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Still, past success is no guarantee for future sales or - gulp - ?profitability. Knowing your history is important in marketing, as Marc reminds us: "Remember a decade ago when marketers lost their collective shit over Dollar Shave Club because it had a cool organic ad, a great back story and an entirely specious growth narrative? LinkedIn was filled with morons claiming that the direct-to-consumer brand was now bigger than Gillette, despite the established P&G brand being a bazillion times bigger and more profitable than its cool new rival."

Likewise, Jane Ostler from Kantar said Liquid Death needed to be careful it did not become a short-lived fad. “A clever attitude may seemingly get you a long way, but as a long-term play [the company] needs to be able to predispose more people to the brand.

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In my humble opinion, Liquid Death is off to a great start. Cheers!