The CEO Interview: DRY Sparkling, Crafting New Frontiers in Premium Beverages
Real opportunities in the food and beverage marketplace can be found in the consumer demand for premium experiences, notably categories like sparkling water and artisan soda. One brand that’s forging new territory and growing rapidly is DRY Sparkling, a Seattle-based beverage brand founded by Sharelle Klaus, the company’s CEO. DRY Sparkling has all the hallmarks of what attracts today’s consumers to premium beverages. With flavors like lavender, cucumber and juniper berry, DRY has developed a new sensory experience that is complex, rich and very distinct from mass-market equivalents. Hartbeat caught up with Sharelle recently to discuss what’s driving DRY’s success.
You used to be called “DRY Soda.” Why the change to “DRY Sparkling?”
This was driven by the fact that we felt we had gotten a little bit away from our original messaging and the original idea I had, which was to create an elevated soda experience that was very focused on flavors that you could pair with food, like you would a fine wine. It was meant to be a sophisticated alternative to wine or cocktails for when you couldn’t (or didn’t want to) drink alcohol.
Over the years, as we grew and went through the recession, we started focusing more on the health and wellness aspect of DRY (i.e., the fact that DRY was less sweet and it had only a quarter to a third of sugar of most RTD beverages). And yet we began to realize that being less sweet wasn't what people were focused on when it came to DRY—it’s a great attribute—but we realized it was about the flavors. I didn't set out to create a health and wellness soda, but an elevated experience. I really wanted to change the soda category, and yet we realized we were probably losing out on quite a few consumers by using the word soda. So what we decided was that we are a sparkling beverage that is a subcategory of soda. This helps us open the door to more consumers.
You introduced DRY through restaurants and chefs, which seems unique for a non-alcoholic beverage. It seems a lot of tastes in foods these days are being driven by chefs, but beverages not so much.
At the time I developed DRY, I was a stay-at-home mom with four kids, and I found myself dreaming about restaurants I could go to. Ten years ago chefs were becoming rock stars: The Food Network was exploding, and I was fascinated with the experience of food and pairing food with wine. I had an opportunity to go to The French Laundry, but I turned it down because at the time I was nursing one of my kids and couldn't drink alcohol. That was when I realized that it would be amazing to create a beverage that would pair with food. I thought that chefs might get behind the concept because there are a million people like me who want to be able to have a full meal experience when eating out, which absolutely includes beverage. I thought that chefs would really appreciate the opportunity to pair a sophisticated non-alcoholic beverage with their food. I started working with Monique Barbeau in Seattle, and then the first person I showed the product to was Kerry Sear at Cascadia Restaurant. The French Laundry eventually brought it in, so that was a high point for me. This type of use of DRY is at the core of who I am personally and at the core of why I created DRY.
The flavors you currently have are not a part of the "normal" beverage market. How are consumers reacting to your flavors and ingredients?
When we go to an event like a fashion show or a trade show, like Aspen’s Food & Wine Classic, there's nearly always a flavor that stands out—and it's usually one of the really unique ones. People say, "A cucumber soda… what's that like?” Or rhubarb or lavender. Basil was my first attempt and then lavender was the next. I had a vision in my head of what the flavor would be like, and I think I did 1,500 tests in my kitchen of lavender to get it right. It's funny with lavender; people either loved it or hated it. I thought it would be one of our middle sellers, but over the years people have associated us with that flavor and now we see it in cocktails and all over social media. It’s the one that is my favorite, the one I’m most proud of. While our flavors were very esoteric ten years ago, now foodie culture has sort of caught up with our lineup and people are more excited than ever to try each one. We get lots of comments about all the different flavors we offer, and people are often surprised by how much they like something. We’re also getting a lot of praise for our clean ingredient panel. When I started DRY, I only had ingredients that were available in my home kitchen, so adding commercial coloring or flavors never even crossed my mind. We’ve been committed to a short list of ingredients for 10 years, so it’s something that’s easy for us to uphold and very pleasing to our customers.
Your website features mixology and pairing suggestions. Do you find that you're having to teach consumers how to use DRY?
Early on we thought we needed to educate consumers on how to use the products. We’ve been simply telling them they can “sip, pair or mix” DRY and that’s all the direction they need. People tend to get really creative. We have learned that consumers needed a play between convenience and value, which is how the cans came about. On mixology, we knew they were using DRY as a mixer, so our new 750 mL Celebration Bottle is the answer. Restaurants had been after us forever for a bottle that size. Restaurants like to be able to use it in lieu of a bottle of water and as a unique sparkling flavor for their guests. The 750 mL Celebration Bottle is merchandised in the mixer section of retailers. I didn't think of it as a mixer when I started the company, but we realized that mixologists were ordering it from all over the country.
The mixology phenomenon has really become significant in the restaurant world. That seems to be driving some of the appreciation for DRY.
Yes, I've been really pleased to see how positive the reaction has been from mixologists to the flavors and the fact that they say, "Wow, you've really done it here and made something I don't have to mix myself, a lavender, a cucumber, a juniper berry, and it doesn't have all that sugar in it, either, so I’m not getting all that sugar flavor.” I really respect these mixologists and craft spirit makers. That's why I feel that DRY needs to have packaging specifically related to mixing, because if you're buying a $60 bottle of tequila, you don't want to mix that with a 99-cent bottle of club soda.
You have made great inroads with mixology and restaurants; is there another kind of store or channel you'd like to take on next?
We somewhat naively thought that a Whole Foods or Wegmans customer was one kind of customer and when we went nationwide the Kroger and convenience store customer would be different. That thinking was wrong: they’re the same customer, just different occasions. So now, it's about putting the product where consumers are: 42 million Americans drink at least one natural soda or spritzer a week. That's a lot of consumers, and they’re in all retail channels. We've expanded nationally into Safeway, Kroger, and we've launched into Target. We're looking at Walgreens and C-stores as well. The category is growing. The growth is a topic I've been describing for years, where just like craft beer, there should be more craft-style sodas or sparkling beverages: products that are more personalized, made in smaller batches, with unique flavors, fewer ingredients and no high fructose corn syrup. DRY is ahead of the curve here and growing faster than any sparkling beverage in the U.S.
Do you have any plans for products outside of DRY at this point? For example, we saw Stirrings go into the premium mixer category.
We do have the 750 mL size for mixer sections, but whether we go with smaller mixing formats we haven't yet decided. I think we've developed a lot of credibility with our consumers on how well we treat flavors and how we respect them. I know there are a lot of doors open to us, but what those are right now I can't say. I know there's a world open to us, but we want to look for the best fit and offer what our consumers want.
In many ways, then, you're focused on a small group of flavors and doing those well.
Yes, that's an interesting point. We just did our Reserve Edition Lemongrass flavor. We did 5,000 cases and it's being sold for only a couple of months. It's had fascinating response. We're so excited by this because we have the capacity to do reserve flavors. We get to test them out. We're a flavor company and we want to do flavors. The retailers love what we're doing with this reserve. It allows us to bring something in and out of the store and offer something exciting and new to our consumers. It has been super successful, so I think you'll be seeing more of this from us.
Any thoughts for food and beverage startups these days, say, compared to what it was like 10 years ago?
The biggest challenge is distribution. My best advice would be to get very creative and don't get discouraged. I can't believe how many obstacles there are in having a beverage company. You have to embrace obstacles to show your creativity and intelligence rather than being discouraged. I give my executive VP credit for saying all the time, "If this were easy, everyone would be doing it." You do have to be relentless. I will say I cried a lot at the beginning, but I could see it all so clearly. My daughter was recently asking me how I did it over the last 10 years, and I told her that if you can see it clearly, you'll get there.
Your website is a great visual experience. Do you see your website and digital presence as playing a big role with your customers?
Absolutely. We're seeing people spend a lot of time on our website. Social media is really exciting to me. When I started DRY, I wanted to have a conversation with customers. I really couldn't have done this without people who were willing to try our products and pull a four-pack of lavender DRY off of a shelf. I love using social media and being able to have a one-on-one conversation with customers. Every time I see someone tweeting about us I say, "We'd better respond." These are the people that will tell us about new flavors or line extensions that they want. We didn't have this opportunity 10 years ago—back then I'd get emails from people. Now with Instagram, Pinterest, Twitter and Facebook, they get to share with us. I love going on to Facebook or Instagram first thing in the morning and seeing all the pictures of DRY that they post. It's really exciting to me that they are excited enough to share DRY with their friends.
It's also great that we can meet with retail buyers and point to what we're doing in terms of our website and social media. Many of them tell us that they love that we're doing it. I'm really proud of the website in the way that it's interactive. We have the cocktail generator, the blog and social media. Through it all, we can gauge what consumers are saying about DRY.
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