Lucky Energy's growth strategy focuses on virality & convenience stores

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:30go into how you go about launching a new brand, especially, you know, consumer facing beverage brand. Hamid has worked at some exciting brands in the past, and I'm sure that he has learned some tricks there and is helping that with Lucky Energy. And I want to just go into the overall state of beverages and what it means to market these types of products these days. But Hamid, how are you doing? I'm doing well. Thanks, Gail, for having me on. Absolutely. So let's start with you. I always say that. But so Lucky Energy, I think it launched last year. Correct me if I'm wrong. What were you doing before you got into the energy drink space?

1:07Yeah. So before I was at Lucky, I spent four and a half years at Liquid Death. I was at Liquid Death early days. I don't know, like maybe employee number two or three or something. Oh, wow. But started off really early. VP of Marketing, Mike Cesario, who's the founder and CEO of Liquid Death. him and I worked together in advertising. He was a creative director and I was the business lead. And that's how we first kind of met up. And, you know, initially hearing the Liquid Death idea early days, like back in like 2016 or whatever, I just thought it was like the dumbest thing on earth. But I really respected Mike and Mike was like a really creative, like visionary.

1:45And it was crazy to see like where the brand's gone from like back when we first launched to, you know where the brand is like today and so yeah at lucky the thing that i think you know i've learned from like being at liquid death is like the idea of entertainment as such a leading device to get people interested into brands it's just something that i don't think a lot of brands were thinking about and trying to figure out like how do we entertain people when we put things out versus just it being all about product benefits and you know reasons to buy all that and i think the reason why is just like, you know, Mike and I are working together in advertising, you know, we had ideas shot down all the time.

2:23Like you basically get one idea in for like a hundred ideas. And even that one idea gets so like watered down. So Liquid Death just became like a creative, like, you know, playground, if you will, for like the stuff that we knew clients would never buy that we could sell here. And so there's a bit of like the principles of that, of seeing how well that worked at Liquid Death that, you know, I definitely am bringing in and trying to really imprint here on Lucky. But I think a lot of people sometimes fail because they take what's worked in the past for brands that they worked on in the past and just try to like copy and paste it to the new thing.

2:59And that doesn't always work. And so the thing that, you know, I'm really mindful of is like figuring out at a principle level, what are those things that do work? But like, what's our unique way of doing things, right? Like I have to remove myself from like what I think is good, great, fantastic for like an energy or dream customer because that doesn't always like match up. Or like the things that have worked at Liquid Death that was really rooted in like humor and satire and like parody, that worked well for LD, but I don't necessarily think that it will always work for other brands. And so we're trying to find our groove for like what the sweet spot is, but really the brand is like a multi-dimensional kind of like a brand that takes on the personality of like, it could be inspiring, it could be rebellious, it could be funny, it could be tongue-in-cheek, but it's got a couple of different facets of how I want to bring this brand to life.

3:49Got it, got it. Yeah, I would say one thing that Liquid Death definitely proved is that it was sort of marketing as performance or I feel like the brand was encapsulated in its marketing. And I feel with Lucky, the product that I know you guys for, and we were just having a conversation, or me and the producer was having a conversation and we were saying, can we say it? But I'm going to say it because your product is Lucky Fuck. That's what it's called, right? Yeah, so we first started as like an attention grabbing device around like, let's call it Lucky Fuck. And it's called Lucky Fuck. You know, early days people just thought we were trying to be like edgy or like use fuck in like some kind of cool way.

4:27But it's called Lucky Fuck because our founder, Richard, he survived a plane crash that killed 137 people, including his father back when he was 12. And then, you know, dealing with all the PTSD and trauma off that tragedy, he had a self-imposed stint of like being homeless on the beach in Florida when he was in his late 20s. He spent a couple of months on the beach just trying to figure life out. He eventually came to like California and in L.A. and he was just doing like tennis lessons. And he met Michelle, who we ended up marrying. And they had a daughter together named Kate. And Kate was born with cerebral palsy.

5:02and she was diagnosed with this condition called inability to thrive, which just means she couldn't put weight on her body. And she was like 15 pounds at like age five. And so Richard was like, Hey, I, he was just like an angry dad trying to figure out how to, you know, basically give his daughter the best life possible. And he created this beverage, which ended up becoming like the world's first like plant-based feeding system that were sold to like hospital groups. And he, you know, had a really good success with that brand and he became like really successful and things kind of took off. And his stepson gave him that bracelet, a bracelet that says lucky fuck on it about five years ago.

5:37It was a bracelet that he just found like on Abbot Kinney here in Venice in LA. And it was like, hey man, everyone thinks you're the unluckiest guy on earth because of the plane crash, because of what you've dealt with. But like, look at the life that you've created, look at the family that you've made. And that's why it was called lucky fuck. And so we're doing some education around that, but we knew early days, it's like X, Y, and Z retailer was not going to clamor to put like something called lucky fuck on their shelves. And it's the same thing that we ran into like a liquid death, but like death was the polarizing word.

6:09The marketing was such a polarizing thing for a lot of retailers. And a lot of retailers really dragged their feet on that brand. And I think coming off of that, because they knew they were late on that, same thing with distributors, they're way more leaning into lucky energy. And so we rebranded. so we have like a duct tape sticker that goes over the fuck so the the fuck is the fuck is still the fuck is implied yeah it's like the example i use it's like like old movies where you see a guy hiding under a lampshade like that's what the fuck is it's still in the room we still embody the dna of like you know being rebellious and all that but it's like we're making it way more brand safe to get the product out to as many people as possible got it got it so let's start You mentioned what the original company was called.

6:54It's now been rebranded. But when it initially launched, what was the conceptualization? Was it just that it would be an energy drink? It would be called Lucky Fuck? What was the original idea? Because you guys were able to raise some money. It's been a difficult time, especially in the VC landscape. So it seems like you had a successful pitch. So what was it? Yeah, I think the early days was like, we really did start off with product first and kind of like branding, packaging product all kind of came together at the kind of the same time. But really, it's like we wanted a product that differentiated and kind of stood out in a very competitive energy category, right?

7:32So, you know, we position on things like we have five super ingredients inside of the drink. So that's, you know, maca for like sexual wellness recovery, we've got beta alanine, which is kind of like pre-workout, ginseng, taurine. And then we've got 200 milligrams of caffeine in a 19 ounce can. And so the product itself, like all the five flavors that we have are intended to kind of evoke a nostalgic flavor that you might be familiar with. Right. So that's, it's like familiar flavors with better stuff inside of it. Only five calories, zero sugar. Like that was a premise. And then I think, you know, early on when we started to see Richard, who's our founder before we even raised any money, he just used his own money to just like do production runs.

8:15And we took those, those runs and we just started selling it ourselves and independent grocery and gyms around Palm Springs and in Austin where the brand is headquartered. And we just started seeing like really crazy velocity because people were just leaning in and be like, what is this thing? It's called Lucky Fuck. Like, like it just had that standout on shelf thing that a lot of brands don't really get to. And some brands are really lucky to have that success on. And so we started to see that. And so that early velocity data, plus Richard's background of being a successful entrepreneur, plus like we started getting advisors on board and we started to get like, you know, head count on board for coming from really prestigious brands that just made this a way more compelling thing.

8:59And so we had this meeting in Austin a couple of months ago and I counted in the room, there's about seven people in our circle who have billion-dollar-plus beverage exits or are on track for a seven. So it was just that made the story just so much more appealing and enticing for investors. And can you talk about distribution? Because you said Texas, you said California. I was reading some past articles, and my understanding, and correct me if I'm wrong, but pretty much you've been trying to sort of own those locations right now, and then ultimately by the end of the year go national. Is that correct?

9:32Yeah, we definitely have like a phase one approach on the markets that we're pushing towards. And so like getting all of California is a huge priority. And we're having a ton of success with, you know, buying with distributors in California, kind of across the board. Same thing with Texas. You know, we're looking at like Nashville in the Southeast and then also Midwest kind of rooted in Chicago. So our phase one approach is like, hey, let's run the distributors that makes sense. Let's really build those out. Let's activate these markets in a really like methodical way where it's not just like, because I've seen a lot of brands do this.

10:03It's like you want a distributor and you kind of go, oh, job's done. Like we're good now. Or like you want a retail account. You're like, oh, we're there. Everyone's just going to pick it up off the shelf now. And the first, you know, hire that I made here was a field marketing director because like winning in market is going to be kind of the key thing for this brand. And so, yeah, that's what we're laser focusing on is just like, you know, just making sure like we crush through velocities when we sell in. And how are, so what are the key accounts that you want? Like where do you think you can stand out?

10:32I feel like I've talked with beverage brands from a couple of years ago, some that made it, some that didn't. And like they were focused predominantly on the New York area. And their entire idea was we're going to get into every bodega. But that didn't work out because, A, that's difficult to do. And B, like just because you're in a bodega doesn't mean that you're going to sell. So where in these markets have you been focused on that have worked? And will that be replicated through every city ultimately in the country? Yeah, I think our main focus is C-Store. So a big C-Store change is going to be where I think this brand wins.

11:06And that's where we've seen really insane velocities to date so far. It's been pretty mind-boggling to see. So I think C-Store starts it. And then we start thinking about like, what does that mean into like bigger box retail for like multi-pack? So C-Store will be a single can play, right? And then multi-pack as we get into like big box like next year, there's more momentum and more like push behind the brand. But yeah, for us, it's like we have to really kind of own and figure out Texas because that's where we're like rooted in. California is like a huge priority space. And then like, you know, Southeast is another one like getting into the Florida market.

11:43So but I would say our first year approach is like we really want to start making a ton of inroads into C-Stores. We have some good news and some good wins that are going to be pretty amazing that will happen over the next couple of months or so for some like bigger names in the C-Store space. And so our door count right now, we're probably in about 2 ,000 plus doors right now. But we think by the end of the year, like, that'll fast approach like 7 ,500 or so by December. And how, like, with you specifically as CMO, when you enter into a new region or you enter into a new chain, what is the marketing play there?

12:17Like, how are you, you know, as you said earlier, you can't just get distribution and then say, like, all right, let's wrap it up, we're done. So, you know, you obviously branding and the look of the can has something to do with it. But what else are you doing? Yeah, I think for us, it's like it's three or four like points on a playbook that we execute. And I think maybe every brand has this, but we'll find our kind of way to do it. It's like, you know, we've built up a pretty good base of creators that we work with. And that's hard. Like sometimes creators, you give them a brief and it's acting and it's not good.

12:50And it's always just like, you know, you get like two wins for like 10 losses on creators. And so we built up a pool of people that are just like lovers of the brand that we think about. Like, how do we activate these people for like in-store appearances and really draw people into these stores? That'll be one part of it. Another part is how we use paid media. So, you know, pretty bullish on things like local radio and audio and really tapping into local markets, both at television, but also through like radio and audio. So we're thinking about that. We've had some really good success early on with Out of Home, had some provocative ads that we did for like Coachella.

13:27On Coachella, we put up like a big billboard on the 10 East going into the desert. And it just said, like, call for a quick fuck. And it had a phone number and you could call that phone number. And we played like this kind of like automated response that just got people interested and told them to like, let's meet up at Coachella. And we told them where to go. So we've had some success with Out of Home. So out of home is going to be another big part of it. And then we've got other like little stunt based things that we're going to do. And so for for us, it's like, you know, we probably will do less things, but but have way more of an attention and focus on making those like the most creative, fun, share worthy things that we can possibly do.

14:06So that's where we put our attention is that. And then there's other pieces like, you know, how we bring like the digital and the physical worlds together. Right. So, you know, that means trial and couponing and getting people to, you know, buy a can, giving them cash back or giving them, you know, value of, you know, merchandise that we give back to people, incentivizing people to purchase and to really get into this brand. So a plethora of things, but, you know, where I think we really, the big principle is like, what's kind of the biggest bang for our buck that we can do for a small brand with limited resources?

14:41Like, what do we think will really move attention? So that's primarily content, social, in-store, and out of home, probably. So talk about the Coachella one, because that's a fun one. And I feel like I've been hearing more and more brands, especially, you know, brands of all different types of categories have been trying to activate with Coachella or other like Stagecoach, other ones like that. So did you like, A, did it work? Did like, did you get a bunch of people calling the phone number? Did you see, you know, a, you know, a spike in sales? And are you like, are you then going to go to other ones and other, are you going to try and approach other events?

15:22Like if you go to Chicago, are you going to do Lollapalooza, for example? Like how, how did you conceptualize it and didn't work to what you thought it would do? Yeah. I think the thing for like early brands or startups is like trying to find these like playbooks that are easily, easily like templatized and you can just repeat over and over. And, you know, sometimes that works, but sometimes there's like these unique nuances, right, for the market, for the event, for whatever it might be. The Coachella idea came together really like in two days. Like we had sales team that would be out in Coachella just like sampling, giving out product.

15:55And we knew that was going to happen. And, you know, we were able to link up with like a creator house who in that creator house, there's NFL talent, digital creators, you know, OnlyFans talent, music people. It was about 18 or 20 creators in a house around Coachella. And we seeded them product for the full like weekend, first weekend activities. And they were great. Like they pushed a lot of content out. You know, we saw them wearing lucky fuck merch actually as they went out to parties, which is insane because, you know, festival gear is like, that's like a big deal, like what you put on your body.

16:29And we saw people wearing merchandise, which is fantastic. So that was one part of it that came together like super quick. And then on the out of home idea, we're like, hey, look, let's just do something provocative and have people call this number. And we had about 200 people that call that phone number, which is one measure and one KPI. But the key thing was, is during those days when we activated all these things together, we saw about a 57 % increase in our daily Amazon average sales. So we saw a lift correspond there. So all the facets of like social KPIs around mentions, the number of followers, the people who like mentioned us, people calling in the phone number, and then actually the true sales number that we saw on Amazon.

17:10All those things are like super positive signals for us to be like, OK, this is a quick turn thing that we can just do for, you know, Austin City limits and the next thing and the next thing and the next thing. So that will be part of like us figuring out experiential and field is how do we do these things that can easily scale from market to market? And then the one kind of like, you know, exploration piece that we're figuring out is like, I want to, you know, do more than just like sampling in front of like a six foot table. Like that stuff is cool and stuff and it's table stakes, but like I want to do more than that.

17:46So playing with the idea of like, how do we do pop-ups in each one of these markets as we kind of go up? Like, how do we make it feel like a lucky store? And what happens inside of that store? And what are the fun, shareworthy moments that happen? So we're toying with ideas like that, too, where, you know, we can take like essentially like a two-week or a four-week pop-up in a city where you can try lucky as we activate these markets and then, you know, and then roll that out from city to city. So what do you think? I know that you said you're just thinking about it, but are there any ideas that are popping more than others in terms of what a pop-up might look like?

18:21Yeah, so we have like, there's some crazy, crazy, crazy ideas. So I'll mention a crazy idea that we'll probably not do, but it's like the idea of having like a lucky tasting slash dinner, but rather than doing it like at a fancy restaurant, we do it like a hundred feet up in the air, like in a crane. So that's like one idea. we have other ideas of just like, you know, finding ways for people to like use and give excuses to get out of things that they don't want to do. So like a free excuse store. So like, we're going to do just like random and weird things where you can still try the product, you can taste it out, you get a sense of like the story.

18:58But it's like, it just gives people some value or utility back. It's not just about like, hey, I'm a brand, like, hear what I have to say. It's like, what are we doing for you? Like, I think that's the key thing for this brand is like, how do we give back? How do we give people like fun, entertainment, but also like utility and value? We're going to take a quick break and we'll be right back. You mentioned radio and I wanted to talk about that a little bit because it's a marketing lever that I feel like a lot of brands do. And it might be just be the bubble of who I cover, who I talk to, but you don't hear people talk about, they talk about audio, but usually they talk about podcasting.

19:33So it makes sense why Lucky would be into radio specifically for the type of product you are. how localized it is. Like you want to get people into C-stores, there's a local radio station, they can talk about that. But how have you approached it? And has it, you know, has that been working? And like, what is the overall strategy with radio specifically? Yeah, I think we're, so we're early stage room planning of it right now. But yeah, I think, you know, for all the progression that I think a lot of modern brands like make is like sometimes they lose track of who the core like customer is who's actually going into these C-stores and really meeting them where they are.

20:07And so for us, it's like we felt like local radio would be like a really, really good spot to do that. And we have some really cool, fun scripts, things that I think are provocative will get people interested. And it's like just a quick way to really motivate trials. So in a couple of months, like I'll know and we'll know how well it worked. But, yeah, I think it's like finding those spaces when you're a startup where a lot of brands are moving out of where you can get efficiencies on media and you just get like the ability to break through in a way that you might not get. because like no one's expecting like a creative, like the one that we'll kind of develop.

20:40And so that's like a key thing for this brand is like finding those like white spaces where we can, where something is not really being utilized or we have the ability to have some creative that just feels so standout relative to who's around us. So that means whether it's radio or how we activate at a trade show or how we think about, you know, doing organic social kind of runs, you know, top to bottom. Got it, got it. You mentioned something at the top that I wanted to get into a little bit more, But pretty much you said, you know, the idea behind Lucky is that, you know, it wanted to be an energy drink that focused more on the fun aspect of it and not necessarily the ingredients part.

21:18Maybe that's not exactly what you said, but pretty much you were saying that it was more about having a reaction from the audience and that there was a little bit more play and fun with it. And I feel like we're in a really interesting time with energy drinks specifically, especially, quote unquote, better for you energy drinks. Like, I think there are a bunch of them that have launched. There are a bunch of them that are doing well. You're seeing the old guard talk more about how they're better for you or changing a little bit of their, you know, their formula. So talk about what on the messaging side has worked for you and how you sort of toe that line between having a bombastic name and being something that is focused on having that type of message.

21:54But then also you are better for you. You have these ingredients that are important that you want people to know. How do you how do you toe that line? I think the example that I use a lot is like, you know, this is some work that I actually went through when I was working on Nestle accounts in my advertising days. And Nestle had a part of their process, essentially this like thing where they would figure out like what is the brand personality for each one of their brands. And that brand personality typically would like last two years. So it could be like a celebrity, an actor, an athlete, whoever it is.

22:30And it could be them overall as a personality, or it could be, you know, oh, this is Kevin Hart in this scene of this movie, right? So it could be a bunch of different things. The brand personality thing was like a very interesting thing because I always thought of like brands as humans, right? And the brands that I love the most, I've been loyal to since I was a kid. And I have no reason to be like, why am I in love with this brand or this brand? It just kind of happened and you just don't know how it happens. so as you know as i was thinking about like how do we really craft this lucky story it's energy is so homogenous and there's like a certain cliche way of like energy drink doing stuff right so you see a typical energy drink thing and it's like you know attractive person living lifting heavy weights or running fast and they're sweating and it's like rinse repeat everyone's kind of following that it's very masculine very action sports oriented and then you have other players that are in performance and like that do it really well.

23:27And I think they are doing a good job there. For Lucky, it's like, you know, if you had a friend and all they did every single day would just give you funny and comedy, but you never got a sense of who they were. They never were vulnerable. They never opened up. You had no sense of like who they were beyond just being comic relief. You'd probably be like, fuck, I need to grow out. I've outgrown this friend. Like I So with like Lucky, I see it as like a multi-dimensional brand. And because of the story and the origin story around like Richard and survival and persevering over like, you know, tragedy is we're making like a classic album.

24:07And if you think about like a lot of classic albums, it's like, it's not just one way, right? You will have some things that are like ballads. We'll have some things that are like club bangers that we have some things that are like, you know, nod your head, more ambient things. but you know it's about really well rounding this brand so we can play in a bunch of different territories and all those things make us distinctly like lucky energy so you know that could be a failed experiment like i could find out 12 months from now like that didn't work and we have to be this thing but i think we're giving people different segments of people things that they want that make sense for them so when we do funny or shocking like a typical energy drink customer like really resonates with that.