Sparkling water brand Ugly Drinks appears to have shut down in recent months.
Drinks industry insiders have noticed that the UK-based company’s website is currently down, and the official Ugly Drinks Amazon store does not have any products available for order. Additionally, Ugly Drinks’ Twitter and Instagram accounts have not been updated since late last year. According to a customer’s social media post, her online order from early March was canceled within days of being placed.
Ugly Drinks did not respond to requests for confirmation of the closure. The brand’s social media accounts did not respond to comment messages.
Ugly Drinks was founded in the UK in 2015 and over the years has entered almost 3,000 stores across Britain, including Whole Foods and WH Smith chains.
The brand moved to the United States in 2018 and began rolling out online and in specialty stores and independent retailers. The company has raised a total of $3.9 million in funding to date, including a 2019 round with participation from Color Capital’s Chris Cantino and Jaime Schmidt. Other investors include UK firms Pentland Ventures and Steadman Partners, as well as startup fund MAGIC Fund.
The company’s plan was to be “as ubiquitous as possible,” co-founder and former CEO Hugh Thomas previously said Modern Retail. Over the past two years, Ugly has ramped up direct-to-consumer selling Company, as well as distribution through marketplaces like Amazon and Boxed in the United States. Ugly Drinks rolled out at CVS in mid-2021, marking its first major retail sale in the United States. As of July 2021, it claimed to be in over 10,000 locations in the United States, including 6,500 CVS stores as well as other local retail stores.
In addition to expanding online, Ugly has also focused heavily on its direct-to-consumer business. One of its most popular marketing strategies was the monthly limited-edition flavor drops — which included out-of-the-box flavors like Marshmallow and Birthday Cake — which the company said last May helped grow its DTC business by 500% year over year.
Thomas told Modern Retail that he has not been involved in the operations of Ugly Drinks since stepping down as CEO last November and leaving the company. citing burnout. He said he had no knowledge of what happened at Ugly Drinks after he left. “If it closed, it’s sad news for everyone involved in building it,” Thomas said.
The apparent decline of the brand came as a surprise to the DTC Twitter crowd. But some investors say the result is not surprising given how difficult it is to scale a drink brand.
“Building a beverage brand is a chore,” Kiva Dickinson, co-founder of Selva Ventures, told Modern Retail. With such competition for storage space, startups need to expand to multiple national retailers to gain enough momentum, Dickinson said. In the case of Ugly Drinks, a CVS presence alone was not enough to increase its wholesale revenue. “Most consumers don’t go to CVS to check out new brands,” he noted.
“I think Hugh [Thomas] stepping down at the end of last year marked the future of the brand,” continued Dickinson. “He’s incredibly smart and hardworking, and was a great operator of this business.”
Ultimately, the challenges they faced may not have been up to the small team. According to LinkedIn, Ugly Drinks has eight people listed as former employees; The company’s US president, Brett Lanford, left in January 2022.
Dickinson also said startups face hurdles to differentiate themselves in the sparkling water market. This is especially true in large grocery chains, where developed in conglomerate brands like Pepsi’s Bubbly and Coca-Cola’s Aha sit on the same shelf alongside young incumbents. “The only thing new brands in this category have going for them is that the consumer is willing to try them,” he said. Additionally, the DTC beverage field has become crowded over the past few years, with new entrants like Olipop, Sanzo, and United Sodas of America.
One brand in the space that has seen success over the past two years is the caffeinated sparkling water brand Limitless, which was sold to Keurig Dr Pepper in January 2020 for an undisclosed amount. The key, Dickinson said, is a unique formula that brings innovation to the table. In the case of Limitless, the company filled a gap in the market by offering 35 milligrams of caffeine in each serving of water.
Ultimately, direct-to-consumer sales are a great channel for testing and bringing new products to market, Dickinson explained. “But that’s a totally impractical way to scale a beverage business, given the low ticket prices and high shipping costs,” he concluded.