How Much Would You Pay For Something You Could Get for Free?

This is an exercise we utilize with our clients during our beverage branding DDOA (Decommoditized Differentiation Opportunity Analysis).

“I’d pay NOTHING!”
Is the incorrect, knee-jerk reaction everyone immediately spouts, and thus the exercise begins…

Let’s take a look at the ultimate commodity: Water.

Water, for the most part, is readily available for most of the developed world for free, yet we continue to throw down dollar after dollar for bottle after bottle as corporations enjoy profits over profits (over $20 Billion in 2021) by charging for something readily available at no charge (and let’s rule out quality as most bottled water comes from the same public reservoirs as our tap water).

To cut to the chase, the hard-earned dollar you’ve exchanged for bottled water may not have been for the liquid at all, you are in fact paying for many of it’s byproducts; the convenience of not having to lug around a bucket of the free stuff you filled at your kitchen sink that morning, easier portion control, or the refrigeration of the beverage the store provides while you are on the run.

The list goes on and the exercise helps change the mindset of business owners on their path to uncovering their true industry differentiators.

Let’s up the Ante on This Exercise.

How could I get you to pay over $500,000,000 for the same water?

Before you run to your cheat sheets and check out common multiples of EDITA, I’ll let you know that today we are speaking about LIQUID DEATH, a four-year-old, canned mountain water brand that sees less than 10% of its valuation in annual sales.

While Liquid Death is a poster child for differentiation (ticking off multiple boxes on our Universe Of Differentiation worksheet, and doing it very well I might add), owner Mike Cessario gleefully admits that the company is 90% brand. A brand that is essentially a punchline or a joke to the small, segmented audience of millennials who “get it”.

Cessario has built an impressive empire under the guiding banner of ensuring every marketing decision ponders the question “Would Slayer think this is cool?”.

If the answer is YES then Mike executes (pun intended). It is this North Star (or pentagram) that has inspired outlandish social media marketing which comically juxtaposes water as “The Most Dangerous Drink In The World” and differentiative craft brewery-style packaging in metal, tallboy cans which purposely disrupts an entire industry that is designing their packaging to look as if they were simply “yoga accessories”.

Yes Liquid Death is a rare Cinderella story, perhaps she’s one clad in leather and thigh-high heels and I could go on and on about how their irreverent marketing led to them surpassing industry giant Red Bull in Facebook followers in under 2 months amongst other notable accomplishments, but we’re here to talk about you.

Beverage Branding? I Already Have That?!

You know revenue and a healthy P&L are major factors in keeping your company thriving in this industry. Therefore, doubling down on branding and differentiation can seem treacherous since trying to calculate the exact ROI for your CFO’s spreadsheets can be an ever-elusive concept.

When working with beverage companies and branding, Decommoditzed utilizes two invaluable axioms:

#1: As noted by valuation and pricing expert, Blair Enns, “the moment the buyer cares who the seller is, is the moment a brand is born”. This is a data point that helps us identify a brand in its infancy. We make buyers care about buying from you.

#2: As brands like Liquid Death show us, the ROI of a brand when properly decommotized, will increase valuation by hundreds of millions of dollars.

A strong dose of differentiated branding is indeed the special, secret ingredient your beverage has been missing. While it won’t make your spirits taste better in the glass, it will taste better in your bank account.