Few signs pointed to success for Spindrift, a Massachusetts producer of sparkling water made with real fruit.
Just eight years ago, founder and CEO Bill Creelman was selling his water from his Toyota Prius. He was married with four kids, had a lien on his house and was trying to sell Spindrift — which clogged manufacturing lines when it was produced. More often than not, he was turned down by retailers.
"If it doesn't work, then there's a whole load of issues that become really real for me," Creelman told Food Dive while reflecting on the early years of Spindrift. "So I had to make it work. And I think from that environment, usually from desperation, you usually come up with the best answers."
Today, the company — which has seen sales soar 800% during the last two years — is ideally positioned to participate in the growing consumer demand for better-for-you soda alternatives that don't sacrifice taste. Spindrift has grown to nearly 50 employees with eight beverages available in thousands of stores — including Trader Joe's, Starbucks, Whole Foods, Wegmans and Target. The company expects products to be available in nearly 25,000 locations by the end of 2018.
Creelman spoke with Food Dive about Spindrift's rapid growth, challenges the business is facing and the company's future. The interview has been edited for brevity.
FOOD DIVE: Talk about the opportunity in sparking beverages.
BILL CREELMAN, SPINDRIFT CEO: The ... exciting opportunity for Spindrift is you have a 40- or 50-year old category in flavored sparkling water that's never had a real ingredient proposition, never had color, never had pulp, you know, never had temperature sensitivity or sourcing. None of this whole vernacular that's in the food world we think about as being an everyday occurrence has never touched this category. That's really been the opportunity for Spindrift.
The sparkling water space is growing quickly with LaCroix, PepsiCo's bubly and Nestlé expanding its reach to target mainstream shoppers. Is the space oversaturated?
CREELMAN: There are 200 plus brands and thousands of products that are out there. ... I think what's happened is in a lot of ways, sparkling water has become what soda was. Bubbles haven't gone away. People love bubbles. So that's good news for all of us that are in that space. ... What sparkling water brings is some of that flavor from soda, and still the taste sensations.
I think it's still super early. If you look at the category size, it's microscopic compared to soda. So the question all of us have is, how big is big, and from a category perspective, where does it go from here? ... Shelf shelf space is tight. CSDs [Carbonated soft drinks] are still by far the biggest, getting the disproportionate amount of shelf space. And then [there is] the lack of differentiation among the ingredients of essentially the entire category: just carbonated water and natural flavor. Our challenge is to tell that there's actually differences between these products, from an ingredients standpoint.
How do you differentiate yourself from your competitors? Some of your big-pocket competitors probably have a lot more money to spend.
CREELMAN: I'd say we do it in a couple of ways. ...First off, ... we do a lot of storytelling through our retail partners — ... Sweetgreen or Panera or Chopt or Dig Inn or Roti Modern Mediterranean. The association with real food and other people telling real ingredient stories ... [is] a huge part of our story.
The other's just tasting our product, seeing our product. It visually looks different. It tastes different. So we spend a lot of time on sampling and just getting liquid out in front of consumers.
Then the last one is really ... some consumer marketing. Really looking at other brand partnerships or influencer partners that are all about transparency and health and better-for-you, and starting to really lean into those partners to help them amplify our message. We were never going to outspend the big guys. We have to do it in other, more creative ways.
Would you ever consider partnering with a big company, which would take a small stake in Spindrift? Would you consider selling?
CREELMAN: Right now, that isn't anything we're thinking about. It's still really early for this category and for our brand. Our brand awareness is still really low, and so we're always looking at partners that can add value, certainly.
But for now, I think the biggest opportunity is more just to kind of stay the course. We love what we're doing. It's really fun to be a disruptive brand in this space, and so that's kind of our goal right now.
How are you different than bubly, LaCroix and the other similar products that are on the market? How do you compete or stand out?
"I think the biggest opportunity is more just to kind of stay the course. We love what we're doing. It's really fun to be a disruptive brand in this space, and so that's kind of our goal right now."
CREELMAN: Fundamentally, those products are made from one ingredient today: sparkling water. ... There's never been in the history of sparkling water anything remotely real. ... So there's no color. There's no pulp. Our products have all those things. They have color. They have pulp. I can tell you the lemon tree. It actually says "lemon" on the back label. ... In this sense, we think of ourselves as really the first craft offering in a category. So that's exciting. It's also incredibly challenging because now you've got in some sense to reinvent or reverse history, or go back and re-educate people.
It's taken us almost 10 years to figure out how to make Spindrift. It's literally required an investment in supply chain. First we had to find all that fresh juice, then we had to set the plants up so they could handle all that fresh juice, and then we had to make it shelf stable so it was commercially viable. So that's become kind of my life's work.
In the case of literally every other [brand], everything's run at room temperature. Everything is just a natural flavor. It doesn't even say "lemon" on the back. It says "natural." So even if you were to ... turn (the cans or bottles) around, none of them call out any particular type of fruit. So it's almost hard to believe that it's [the category is] almost half a century old and yet there has been no innovation in a way that other big categories have innovated.
Do you see other larger players copying you?
CREELMAN: The category is tiny so we're not trying to beat [anyone], or we don't talk about the rest of the category's competition because ... the big opportunity here is bringing more people into sparkling water. The main (goal) for me is not taking someone that's drinking some other product today. It's really getting someone that's drinking a CSD or one of these other products. We actually need them in some ways to come through the sparkling water door, taste all these other brands to appreciate our points of differences.
Spindrift sales have soared 800% during the last two years. What's been behind this?
CREELMAN: We've been very purposeful about our sales. It hasn't been sales for sales sake and sales for storytelling sake, so it's really very deliberate. Foodservice is the initial entry point, and then we gradually moved into the retail world — the Trader Joe's and Target and Whole Foods and now, more recently, Starbucks. It's been really exciting, but it's also been waiting for the right time. If retail customers were ready for sparkling water, if they haven't yet seen what's happening in this space (then we're) probably not the right brand to start them off in. ... We have definitely benefited sales-wise from what's happening in the category.
How does your product compare to others on the market?
CREELMAN: We are in the higher end. So again, with real ingredients, you think about fresh lemons, oranges, grapefruits and what our process is in order to produce that product versus the alternative. It's definitely going to be on the slightly more premium side, but what we talk about is basically accessible premium. So it's still priced at a price point that people [can afford], our typical eight pack is around $5.99. The four pack can be $3.99 roughly.
Have you experienced any challenges in getting real ingredients and then incorporating them into your drinks?
CREELMAN: You could imagine what it's like with these sparkling facilities around the U.S. having never really dealt with real ingredients, and certainly not at scale. So you show up there with all of your fresh juice or your purees and you know, they look at you like you have three heads and then they don't have refrigeration for them. Maybe they have a little locker. ... We've become persona non grata at a lot of these production facilities because we would clog their lines. They would have to slow down their runs. They would often say that they were finding pulp a week later in other people's products. We were told "no" over and over and over. And, in fact, almost all of our important retail partners today, the people who make up the majority (of our sales), all told us "no" at the beginning. And then it gradually made its way to acceptance of the product.
"I think failure is a necessary step on the road to success. You have to listen, especially in this kind of a dynamic space."
I think failure is a necessary step on the road to success. You have to listen, especially in this kind of a dynamic space. You have to be perceptive when you hear customers say, "Well, you know, gee, I loved this, but have you thought about doing that?" It's hard as a hardheaded entrepreneur. ... I tend to think that my ideas are the best ideas, but the reality is that through collaboration, generally the best ones survive.
What did retailers tell you at first?
CREELMAN: We started out with a bottled product, a glass product that was refrigerated, that had an inch of pulp on the bottom. It was called soda and it was $2.99 everyday. ... So the retailer said, "Man, this is hard to deal with because it's refrigerated and takes up space. ... Man, this is expensive. It's delicious, but you have no take home variety. How many single $3 carbonated drinks are people going to take?"
We said (to customers), "Please try, please try and please try," but at the same time we were saying, "Wait a second. Is this a viable long-term business? Are we actually going to have a business at the end of this process or not?"
How have things changed since you started the business?
CREELMAN: We're very lucky. We sparked the winds of change. The sparkling water space is definitely having a moment. ...Our points of difference that we worked so hard to establish, I think are better understood. And we think that two trends are going to continue. One, the kind of transparency from farm to table. People want to know where their food comes from. That trend is real. And then we think that it's unlikely people are going to go back to just drinking sugary drinks, that seems unlikely at this point. Sugar, and the move away from sugar, has now stuck around long enough. And the sugar replacements are a little bit questionable. So that's how we've approached it.
How do you know sparkling's popularity will last?
CREELMAN: It's funny, I mean, I just think it has such a broad appeal and the idea of a sparkling drink that applies to an eight year old and an 80-year-old, ... that was unheard of 10 years ago. ... I think it has enough, it kind of works across enough consumer need states that it has staying power. I could be wrong, but for right now that's the bet we're making.