Modern Retail Rundown: Olipop now valued at $1.85B, Poppi's Super Bowl marketing backlash & January retail layoffs

0:03Hello, everyone. Welcome to the Modern Retail Rundown. This is Gabby Barco, senior reporter at Modern Retail, and I am here with Executive Editor Anna Hensel. Good morning, Anna. How are you? I am good. How are you doing, Gabby? I'm good. Happy Valentine's Day. Yeah. I mean, it's a big, big day if you sell flowers or chocolate, as we've reported on at Modern Retail throughout the week. And it's a big sales week for a lot of other stuff, too. Yeah, exactly. And self-gifting. If you have not read my story, please read my story about brands encouraging us to self-gift aka shop for ourselves which we do all the time but that's neither here nor there but yes let's uh talk about this week's rundown okay so first up we have a lot of healthy soda news first we're gonna talk about olipop's latest funding round which really shot up their valuation this week and then we're gonna talk about a story from last week but that got a lot of spilled ink, which is Poppy's Super Bowl controversy.

1:10It involves vending machines and influencers. So people really jumped on this. But lastly, we're gonna wrap up by talking about all the retail layoffs that happened in January, because, you know, there's just been a lot of store closures. So it was just a lot bigger than the usual rounds. So we'll talk about that. But But yeah, first up, let's talk about Olipop receiving a fresh round of capital. It raised a$50 million Series C round. You know, JP Morgan led the round. And basically now its valuation is at$1.85 billion. So yeah, what are your thoughts? Well, I have a question for you. First of all, Gabby, like what what are your beverages of choice?

1:58Do you drink Olipop? I know this is a hot hot topic. I drink all of them. I'm like pretty agnostic like whatever. Sometimes whatever's on sale. But yeah, I drink Olipop and Poppy and a bunch of kombuchas. You know, I just did dry January. So I've pretty much had them all. What about you? Yeah, no, I'm the same way. I'm pretty brand agnostic, but I love trying a fun new beverage. So like if I go to the grocery store and I'm like, ooh, I've never tried this one before or this brand has a new flavor, I'm a sucker for that and I pick it up. But yeah, I think that this big funding round just goes to show how much interest there is right now in, I think part of it is driven by interest in these healthy and functional drinks.

2:48Maybe it's just consumers looking to try new beverages. But yeah, I am still blown away at like how quickly multiple of these new soda brands are growing. And Olipop will use the money to expand its product lineup, distribution and marketing efforts. Yeah, Olipop. So it's been around since 2018, which I guess at this point is a while back. But yeah, it is now it says we have some fun stats that they released, which is that they're now the top non-alcoholic beverages. brand in the US. This is Spins Data in partnership with Serkana. And it's now profitable. So that's a big one when you're raising a lot of money.

3:32And yeah, the annual sales hit$400 million last year. That's like double 2023. Yeah, so some more fun data. And I think this really speaks to the type of customer that these types of products are targeting, which are half of their customers or half of their growth comes from people basically trying to cut back on traditional soda. And the other half is just people who are really getting into like carbonated drinks. That's, I guess, I fall under that half. I'm not a big soda drinker. So it is interesting that it's, you know, it's a diverse set of people. And then this one I loved. It's that one in four Gen Zers drink like Olipop, the company says.

4:15So yeah, it's a wide, wide range of people. Yeah, I think the point you brought up about more people getting into sparkling drinks is interesting. Because yeah, I do wonder how much interest in Olipop is driven by indeed people who want a healthier beverage. Like I wonder how many people do people actually know that it's like a prebiotic soda? Do they actually know how much fiber it has? I think people are trying it for a lot of different reasons. And also they've grown their distribution a lot, which helps, of course. So their growth has been from grocery, convenience, food service. The brand now sells through 50 ,000 doors, including Walmart, Target, Whole Foods, Kroger, Costco.

5:01A bunch of other retailers were probably not thinking of there. And then there are other food service partners like Sweetgreen and Starbucks. I also know that one thing that I think drove a lot of growth for Olipop this year, and I imagine will still in the years to come, is that they reformulated the product a bit so they could sell a shelf-stable version. So if you've seen Olipop in stores, you've probably seen it in the refrigerated section. It's just more expensive. so I was not surprised to see that they released a new formulation that could be shelf stable it also had less fiber but like again I don't know how much people care about that so I will be interested to see like from my perspective Olipop and Poppy are always compared and we'll get into Poppy more later but one thing that I thought Poppy had going for it is that it was shelf stable.

6:03And now that Olipop is placing more of an emphasis on that, I wonder how much that is going to accelerate their distribution. Yeah, I mean, I think, you know, with this new funding, of course, they're saying that they are going to be using it to expand the product lineups. I think we can expect more formats, more flavors, distribution, and then their marketing efforts. I mean, They have not splashed out on Super Bowl ads per se, but, you know, they are they do have pretty robust marketing digitally and otherwise. So, yeah, it'll be interesting to see, you know, just how how much more they can grow and compete with legacy sodas, which, you know, whenever you speak to them, this is really their goal is to offer people alternatives to to the big guys.

6:52So, yeah, it'll it'll be interesting. But now I think we're going to talk about it some more, but there's just way more competition within just the space, the functional healthy soda space since they launched in 2018. So, yeah, it'll be it'll be interesting to see. But, yeah, speaking of healthy soda news, let's let's move on to Poppy. I'll let you take the lead on this. Yeah, I just thought this would be a fun piece of news to discuss. So this year's Super Bowl brought out one interesting influencer drama courtesy of Poppy's marketing campaign, which involved vending machines. So what happened over the Super Bowl weekend, Poppy set a bunch of influencers, branded vending machines that drew the ire of the Internet.

7:44Like, I think people just thought it was wasteful. Who needs a branded vending machine? the idea was to have these influencers post about having poppy at their disposal to celebrate the big game so i think it was about like i imagine it wasn't about just like okay sending people vending machines to just have in their home the idea was that they would have this huge party and like yeah they could celebrate having a poppy vending machine um but a bunch of social media users criticize the stunt calling it frivolous out of touch i think again people just looked at it as like this brand is just like sending something that isn't useful that's wasteful other creators said the vending machines should have gone to public spaces or communities um instead of influencers i also think that's a whole other thing like people have a lot of opinions when you send influencers free stuff.

8:45But yeah, what did you think of this, Gabby? Yeah. And because I think people don't want to see, quote, I'm doing air quotes, rich influencers just getting more free stuff while, you know, the rest of us purchase the product, which I always think is an interesting point. Because Poppy, you know, as they pointed out, like they did grow via creator and influencer marketing. So this has always been a part of it. But I think first I was like, okay, and then I looked at them. I will say they are really big machines. When people said vending machines, I don't know why I was expecting this like little Yeah, like you put in your kitchen or something, but they're big.

9:23And then how did it escalate? So we're gonna, I guess, circle back to Olipop was involved because, you know, their social media, I guess, manager, whoever runs the account, started commenting on some of these posts. And one of them claimed that these machines cost$25 ,000 a pop, which Poppy then clarified is not the case. I think it's like less than half of that. But again, not the point. The point is that it just kind of created this sort of snowball effect because then you have some commenters being like, well, they also spent, you know,$8 million per 30 seconds on their Super Bowl ad. And this is the second year in a row that they do a Super Bowl ad.

10:04So none of this is new. I think you just kind of all dovetail into this. Yeah. And anytime influencers are involved, people love to pile on. Well, OK, here was a thought I had. So I wondered if another brand, let's say Diet Coke, sent people vending machines, would there be as much outrage? I know some people personally who would lose their minds in a good way if they got a Diet Coke vending machine. I also think part of it is Poppy has become very popular, but I don't think, A, they have enough brand cachet to do something like this quite yet. That's the other thing I was wondering. And I also think that there are maybe more expectations around a newer startup that they will be a bit more not as like wasteful as megacorporations.

10:57So I also wondered if part of that like fueled the outrage. I think so. I think we're you know, the playbook is so set in place for people. We expect these startups to have like the scrappy guerrilla marketing. And then, you know, of course, when you're on the world's biggest advertising stage, you are going to get scrutinized. But I think in this case, you know, of course, brands can spend their money however they want. But, you know, when you have even the founder, Alison Ellsworth, who's been featured in modern retail a bunch, she went on TikTok and explained, you know, kind of try to clarify a lot of all of this misinformation as she did some damage control yeah yeah for example i think she said that point of this was that they they were always going to reuse these machines you know to put in different like colleges and teachers lounges in the future and people can kind of nominate whoever they know um so yeah these aren't going to stay at these influencers houses i feel like maybe if we didn't make that clear but you know some people are like carbon emissions like they're always going to find, you know, reasons why they shouldn't have done it.

12:05But I think the big theme I saw was, which is really interesting, at a time when people literally brands are spending millions of dollars on ads is that I saw some comments being like, you know, right now, so many people are struggling and the you know, the economy and the climate is obviously very strained. And so they don't like to see, you know, these, yeah, I guess, big gauche, as they put it, campaigns, But that's also subjective, of course. Yeah, I think that's a great point. I do think that part of the outrage was driven by just this economic climate. But at the end of the day, this is a fun thing to discuss.

12:46I enjoyed watching the TikTok videos. I also think people will forget about this in a month. Yeah. And then, you know, of course, we're talking about this sort of gut health category. I think these two brands are going to continue to make headlines, but I don't think it's going to make much of a difference. Like, yeah, like you said, I think like everything else, it's going to probably get, you know, by the next news cycle. Yeah. And there's other things. It's interesting. Some of these brands are coming under scrutiny for like how healthy they actually are. Poppy last year was sued for its claims it made around gut health and how healthy it was.

13:29So I don't know. I'll just say these brands will continue to be pulled into the headlines, I feel like. Right. Yeah. The bigger you are, that will happen. So yeah, let's move on. Let's talk about all the data that came out that indicates that retail job cuts really spiked in January, which I guess is a little bit of a trend that does tend to happen because it's post holidays. A lot of retailers are, you know, letting go there, whether it's seasonal workers or sort of just making a lot of cuts. But yeah, what are you want to talk about some of these numbers we we were getting? Yeah, I thought this would be interesting to talk about just because it's, you know, the first month of the year is happened.

14:13We're starting to get some data now about how the year I feel like will look for retail, just kind of looking at some of the job numbers that have come in. Obviously, it's so hard. There's so many sectors within retail. I would take all these numbers with a grain of salt, but these are interesting data points to keep in the back of your mind. So one report that came out this week was from outplacement firm Challenger Gray and Christmas, which said the retail industry saw 6 ,419 job cuts in January. And that's everyone's definite. You know, some people look at like seasonal workers. Some people look at store workers.

14:51Some look at just corporate workers. But what's interesting to note is like whatever data you look at, what are the year over year and month over month spikes? Right. So according to this firm, those job cuts are up 96 % month over month, which again, isn't surprising given the seasonality in retail. But it's also up 20 % year over year. So I think that's the more concerning part. the report didn't get too deep into why this is happening it just cited things like volatile economic conditions and cost-cutting measures but what also came out this week is or i think it came out a little bit ago but um according to the u.s bureau of labor statistics the retail industry overall added 34 ,000 jobs in January.

15:42But retail showed little net change in 2024. And I think that both of these data points, there's always going to be cuts in some areas and additions in others. But overall, right now, it doesn't seem like a great time for retail employment. Companies aren't looking to go on these big hiring sprees. And then you also had some other concerning headlines at the beginning of the year. So if you just look at one, one of the biggest restructuring announcements came from Estee Lauder, which during its earnings report said it would cut up to 7000 jobs. And that's going to continue to play out like over months.

16:23But again, I think all to say it's not looking too optimistic for retail hiring at the start of the year. Yeah, maybe this is a good time to talk about even just anecdotally speaking, we haven't really seen like these big announcements that we usually get maybe like every couple weeks or month about a new CEO or new big executive starting. And no, not to say that, of course, that's representative of retail employment generally. But I do think a lot of companies are kind of just sitting on their hands right now or like waiting to see anytime I talk to a company, I feel like they're like, we're just waiting to kind of see what happens because we're in such a volatile environment right now, whether it's the tariffs that we're kind of, you know, holding our breath to wait to see what happens with.

17:12But yeah, a lot going on that I think a lot of people are kind of just going to hold off. Here's what I've seen anecdotally. One last year, I feel like a lot of companies weren't hiring already or they were trying to hold off on hiring for certain roles or like making do with junior level talent because I think a lot of companies weren't seeing growth because of inflation and consumers overall just not wanting to spend as much. So I talked with I remember one CEO who said that it took them much, much longer than he thought to find a CMO. It took them like, I don't know, six or eight months or something.

17:57But they were being really cautious about it and wanted to wait until they found the absolutely right person. So that's like one thing, right, that's impacting hiring. And then now we got tariffs, which is a whole other thing. And I think that, you know, ostensibly we will have new tariffs implemented on Canadian and Mexican imports, but maybe that actually won't end up happening. But companies are very much in a holding pattern right now. So I don't think no one wants to be like, we're really going to double our marketing team this year until we know what's going to happen. So this is from across the border, but we reported on how the parent company of Sheertex put around 40 % of its workforce on temporary layoff because of the uncertainty over Canadian tariffs.

18:52Sheertex manufactured in Canada, but a lot of its business came from the US. The CEO also said it sounded like the uncertainty over all of that impacted. It made it harder for them to close a funding round, it sounded like. And so, yeah, there's just a lot of uncertainty right now, which is tough. I am very curious to see how this all plays out. I don't have an answer. I'm just like, this sucks. Yeah, I think so. And I think we're kind of seeing this sort of skeleton staff approach to a lot of especially small brands, which, you know, obviously have their own challenges right now. But there does seem to be a general sense of we're going to try to optimize the staff and make do with, you know, the staff they have now, whether it is maybe more junior people that are taking on like lead roles or whatnot.

19:44But yeah, it will be interesting to see how it trickles down. Hopefully there's more stability as we find out more. But we'll see. Yeah, here's hoping. Okay, well, on that note, that is our show for this week. Please rate and review us wherever you're listening. It really helps us out a lot. Follow us on social media, Modern Retail. And on Thursdays, you can listen to the Modern Retail interview show, which is now co-hosted semi-regularly by Ana. So Ana, who do you have? Yeah. Who do you have on next week? You can preview for us. Next week, we will have Kevin Wertz, who is the chief marketing officer of Bedrock.

20:25So Bedrock is a platform company that owns multiple brands. But we really talked about their watch brand, Shinola. And so it's going to be an interesting year for them because they have a watch factory in Detroit. So ostensibly, we're going to see maybe more interest in American-made or American-assembled goods. So we kind of spoke about how they're positioning the brand, how they're thinking about the year, and also like all of the intricacies about how you market products that are made or assembled in America. It was a really interesting conversation. Yeah, no, that's also obviously very timely right now.

21:04So everyone tune in and yeah, we'll see you back here next week.