The $1 trillion global non-alcoholic beverage industry is ripe for a Netflix-sized disruption, according to Iris Nova founder and CEO Zak Normandin.
“I think that the beverage industry is in a very similar place now to where Netflix (NFLX) was with the movie industry, or the media industry, back in 1997. It's a very antiquated distribution system that's in place right now,” Normandin said. He spoke in an interview during Yahoo Finance’s monthly Breakouts series.
Iris Nova serves as the parent company of the flagship beverage brand Dirty Lemon, which has sold more than 2 million bottles since inception in 2015, largely to millennial women. Celebrities including Cardi B, Karli Kloss and Kate Hudson have promoted the low-calorie, functionally focused lemon beverages, which are infused with wellness-intended ingredients like matcha, collagen, ginseng and chromium.
One of the main differentiators of the company is its SMS-based ordering platform, wherein customers text their orders directly to the company to then have bottles of the product shipped to them, typically in one to two days. Iris Nova has distribution centers throughout most major U.S. cities, Normandin said.
The Iris Nova orbit also includes a brick-and-mortar retail concept called The Drug Store, which also incorporates the company’s text-based ordering system. At these cashier-less locations, customers can walk in, text their orders and pay on their phones. Last year, Iris Nova acquired chatbot company Poncho, helping it build out its tech platform.
“We're building technology to support the next iteration of distribution of consumer products, not just beverage. And I think that's an important note,” Normandin said. “We're testing this with beverage right now, but the technology that we're developing could apply to beauty, personal care, home goods, anything that has a high velocity that you're reordering on a regular basis.”
While the text-to-order system may seem a novelty – or perhaps, to some, a fad – Normandin said he’s confident it’s the start of a long-term trend in companies using technology to interface directly with consumers to make sales.
“The most interesting parallel to this is Netflix. So Netflix launched in 1997. And at the time, they were just basically a DVD-by-mail type delivery system,” Normandin said. “What everyone questioned back then was like, why are you investing in streaming? It's like, you know, the path to distribution [was] through DVDs at the time.
“They invested in streaming, and it wasn't until seven years later that they released their first original series, which was ‘House of Cards,’” Normandin said. “Now if you look at Netflix as a company, they're much more of a content company now and less of a tech company because the technology has been commoditized.”
That trajectory – focusing first on creating a technology platform and then on building on top of that with content or a product – is precisely what Iris Nova is targeting as it grows a portfolio of brands.
Iris Nova previously announced plans to invest $100 million over the next 3-5 years to incubate up-and-coming beverage brands, which will all then reside under the parent company’s umbrella and use Iris Nova’s tech platform.
“Our focus is very much on beverage right now, but beyond that, our aspiration is to build the CPG (consumer packaged goods) conglomerate of the future,” Nomandin said. “So a conglomerate that takes away a lot of those friction points and the different layers that have historically just taken away from the customer experience.”
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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