Liquid Death’s Billion-Dollar Valuation Stresses The Power Of Brand

Food & Drink

Liquid Death is now a billion-dollar beverage brand, thanks in part to the $67 million funding round the company raised in new capital from strategic investors and distributors. The $1.4 billion dollar valuation is likely also due to the company’s performance in the market since its 2019 debut. Revenues from Liquid Death’s retail sales were up over 100% from 2022 to 2023—growing from $110 million to $263 million to $110 million, respectively. Its new valuation is now double what it was in 2022.

For many, Liquid Death’s success is paradoxical. The company’s core product does not offer an outstanding innovation regarding its water, yet the brand’s gravitational pull seems to have the market in a chokehold. By all accounts of business orthodoxy, the math ain’t mathing.

And that’s the trick: it’s not what’s in the tallboy cans that has driven Liquid Death’s success; it’s everything around it. The company’s billion-dollar valuation underscores the importance of brand and its dominating effects on consumer behavior.

In a world where marketers continue to hang their hats on building a bigger mousetrap in hopes of convincing people to consume by telling everyone about the benefits of said trap, Liquid Death has decided to focus on meaning.

Liquid Death was co-founded by its CEO, Mike Cessario. Cessario is an advertising creative director who felt that all the good advertising in the world was seemingly trying to sell you something that was bad for you. His affinity for fitness and health led him to a potential solution: What if you took something healthy and made it cool?

This was the genesis of Liquid Death—a beverage company that aims to “murder your thirst” with its water and tea offerings while also bringing “death to plastics” by serving its beverages in recyclable aluminum cans.

This is how Liquid Death sees the world, and this is the gospel the brand preaches. It employs burning skull imagery on its cans to signify its quest to annihilate thirst and plastics—a worthy foe, considering the fact that 80% of plastic water bottles end up in landfills and take up to 1,000 years to decompose. It uses irreverent humor in its communications as opposed to the normal purity signaling of the category. It treats every move it makes as an opportunity to demonstrate its rebellious voice as an extension of its worldview.

For instance, after threats of legal action for calling its iced tea/lemonade product the “Armless Palmer,” a perceived infringement on the IP of the legendary golfer and drink namesake, Arnold Palmer, Liquid Death changed the name to “Dead Billionaire.” This is a perfect example of the brand at play. There is nothing particularly unique about the liquid’s value propositions, but everything about the brand is distinctive—from its assets to its worldview—and rich in meaning.

There is no lore about Liquid Death’s water being sourced from the snowcaps of the Scandinavian Alps or extracted from the springs of some secluded paradise with imagery of lush greenery and epic waterfalls. Nope, it’s just plain old H2O. In fact, I can’t even tell you where Liquid Death’s mountain water is sourced because the brand doesn’t talk about it much, which is antithetical to the bottled water category.

Most water brands differentiate themselves on key selling propositions like source location, PH balance, electrolytes, alkalines and other scientific terms that most people use but can’t explain. These differentiators help justify the premium people pay for bottled water despite not knowing what they actually do.

And that’s the jiu-jitsu that Liquid Death has employed to get the upper hand on what can only be described as a saturated bottled water market. While its competitors are trying to out-feature the other, Liquid Death is focusing its efforts on imbuing the brand with meaning beyond the bells and whistles of the product offering.

Everything we know about brands supports why this approach is so lucrative for Liquid Death: Brands—at their core—are vessels of meaning.

From its conception, branding has been a way of establishing ownership. From branding irons on cattle to logos on bottles, marketers have used brand marks to identify ownership and, subsequently, signify something in people’s minds. The brand’s value was considered greater when its meaning—the signified—conjured cognitions and affects about a product, company, or person that extend beyond what it does and how well it performs.

The bottled water category is a great example of this. For most bottles of water, say Poland Spring or Ice Mountain, we might spend a dollar or so on a bottle.

However, we’d likely spend double that for Fiji or Smart Water, and most people will attest that this willingness to pay a price premium is due to the aforementioned value propositions—PH balance, electrolytes, etc. And this would seem justifiable to most, even though blind tests have found that most people can’t even tell the difference between tap and bottled water.

Maybe it’s only a coincidence, but it’s rather apropos that Evian, the popular bottled water brand, brand name is “naïve” spelled backward.

This phenomenon is not unique to water; it can also be seen in fashion. Take a fleece jacket from Patagonia, North Face, and Columbia. Remove the logos and place the fleece jackets next to each other. It will be pretty difficult to distinguish one from another.

On the surface, the product is parity. Yet, we’d be willing to pay a premium for the one that has more associative meaning to us—not because of what it is but because of what it means.

Similarly, this is evidenced in the world of medicine as well. Last year, an FDA advisory panel unanimously concluded that an active ingredient in most popular over-the-counter oral cold medicines was no more effective than a placebo—sugar water. According to reports, this announcement jeopardized roughly 260 branded products on the market.

Or, said differently, of the 260 products on store shelves that supposedly promise to beat your cold, one is therapeutically no different than the other despite making the same performance promise.

This is unbelievable, I know, but the findings of the panel essentially reveal what Liquid Death has been able to exploit; most products are the same. The only real difference is the meaning we ascribe to it.

It’s the meaning that we impregnate into these marks of ownership—and their products—that evoke thoughts and emotions inside of us and, ultimately, drive us to consume, vote, download, watch, share, support, and a host of other behaviors that marketers so desperately want people to adopt.

These meanings don’t inherently reside within the product; they are signaled by marketers and interpreted through the cultural lenses of a given group of people. Therefore, a brand’s ability to navigate these waters becomes a byproduct of the brand’s ability to read the tea leaves of culture and signal meaning appropriately.

What’s the value of this ability? If Liquid Death is any indication, I would say roughly a billion dollars.

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