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- Hint, the San Francisco beverage startup, took a substantial hit to its corporate food service business when tech titans closed campuses and sent workers home amid COVID-19 concerns.
- To stem losses, Founder and CEO Kara Goldin, former AOL ecommerce chief, made a hard and fast pivot that tripled Hint’s online business and kept the world’s largest retailers stocked with water, landing it a coveted deal with Costco.
- The company’s digital transformation from a retail business to one evenly split with direct-to-consumer has proven key in helping the brand reach its customers wherever they shop.
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In March, when the coronavirus crisis spread across the world, retailers like Instacart saw upwards of an 8,000% surge in demand for certain household goods. As people raced to the stores for essentials, suddenly the second largest retailer in the world, Costco, found itself unable to stock water. This is when Hint got its lucky break.
The San Francisco beverage company was seeing mounting cancellations from companies who were sending workers home. Although Hint water was already in major retailers like Amazon, Whole Foods, Starbucks, Target, and Walmart, it had yet to land the king of wholesale clubs.
According to the company, Hint was profitable, with over $100 million in annual revenue, 50% year-over-year growth, and nearly 200 employees. It reported raising $76 million since its founding in 2005 and had over 100 investors, including celebrity John Legend, former Twitter chairman Omit Kordestani, serial entrepreneur Jonah Goodhart, GSV Ventures, Gingerbread Capital, Springboard Ventures, The Perkins Fund, and Verlinvest, which led its Series C in February 2019. The zero-calorie, fruit-infused water was available in over 30,000 retail stores, on corporate campuses, at sports and music events, online at Amazon, and on the company website, and ran its first Super Bowl ad in January. Most of its business was retail and 90% was water as it started to expand into other products, like pear-scented sunscreen.
When Costco came calling, Hint was in the midst of a hard and fast pivot. Founder and CEO Kara Goldin shares how she’s been able to navigate the new normal, reinvent on the fly, and take on growth during these uncertain times.
Whatever the problem is, solve it quickly
On March 15, Goldin noticed her product was missing in stores. It struck her as odd that large retailers like Target could be out of Hint water as they had state-of-the-art, point-of-sale (POS) systems that automatically reordered items as stock ran low. She called the buyers of retail partners across the country to find out what was going on and many responded that they were overloaded and needed help.
To keep shelves stocked, Goldin sent Hint trucks full of water directly to the stores, bypassing distributors that weren’t prioritizing certain essential goods. Operating independently of large beverage companies like Coke and Pepsi, Goldin felt she could be creative with logistics.
She then reallocated teams to work in the retail stores, avoiding laying off 20% of employees who were idle due to the shutdown of corporate and events businesses during the quarantine.
It was an all-hands-on-deck effort. “I was working at Target San Rafael and a store employee gave me additional space saying how impressed he was to see the founder stocking shelves,” Goldin said. Although shelf space is typically contracted at the national level, local stores can give additional space at their discretion, and Hint was able to land prime retail space that drew in more customers.
Your fans are your most valuable asset
Hint’s teams gave away thousands of branded masks while working in the stores. As people began to post selfies on social media, Goldin, who had been AOL’s ecommerce chief for seven years, realized that she was sitting on a goldmine. In addition to amassing a significant fandom of one million followers across Facebook, Twitter, and Instagram, Hint’s email database had grown to one million customers, which could be mined for hidden revenue. Goldin had also developed a significant following herself.
She quickly messaged fans telling them they could order water directly from Hint, then launched an aggressive media campaign with Facebook and Instagram ads, Google search, TV buys, and email promotions to drive sales online. According to Goldin, shoppers began flocking to the site to enjoy exclusives, like sampling the complete collection of flavors and beta testing new products.
“We’re coming out with a clementine-scented hand sanitizer and although it’s not out for a couple of weeks, we leaked it on Twitter and people are going nuts,” she said.
When Costco completes you
Costco and Hint had been talking for years, but Goldin thinks what prompted them to reach out at the end of March was that its suppliers couldn’t keep water on store shelves and Hint appeared to be available everywhere, in stores and online. The main thing the buyer wanted to know was if Hint was made domestically and could handle the volume.
It was an easy yes. Hint had ample capacity having just ramped up production to onboard the world’s largest retailer, Walmart, and its subsidiary Sam’s Club. It was made in the US in a fully automated process with no risk of shipments getting held up in customs or human contamination shutting down the plants, Goldin said.
Costco awarded Hint a national deal, a big win for the little water company as the retailer tends to buy regionally. By the end of July, Costco had added Hint to its business centers to supply offices and restaurants, and discussed opportunities to go into Canada and Asia.
“For anything overseas we would want to set up local operations with local plants, local staff, and local fruit, as we need to produce as close to distribution points as possible to minimize our costs and carbon footprint,” Goldin said.
The path forward
With Goldin reporting Hint’s direct-to-consumer business increasing by 300% and Costco and other retailers fueling more growth, “tripling the overall business is a very doable goal this year,” she said, but emphasized that it’s not about fast growth.
“Startups get into trouble when they grow too fast, too soon. We’re about building a sustainable brand,” she added.
As Goldin now looks to crack the code on how to get noticed on Instacart, “You need to be a little paranoid and not get too comfortable,” she said. “Wherever the customer wants to shop, that’s where we want to be.”
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