How we’re spotting the next revolution of CPG brands
For the past 12 years at Science, we have formulated our theses around dynamic consumer behavior to deploy out of our institutionally-backed Fund III.
Charts, graphs, maps, data, micro and macro — we look at current trends and product segments that align with categories that have weak net promoter scores, signaling a need for disruption. For the past year, we’ve been eyeing and working with companies that have found opportunities to be loud, and we’re very excited about the future.
CPG has come a long way, and we’re seeing vast change quickly approaching.
The way customers behave, shop, and consume is changing — they want to know how and where their products are being manufactured.
There is an excellent reinvention happening where emerging brands are pairing functional ingredients with high-quality elements to replace legacy products. If you walk even a few aisles of your local supermarket, you’ll see endless shelves of homogenous products; creative founders have seized this moment for an absolute refresh.
Verticals such as functional foods, gut-friendly market items, alternatives to alcohol, premium ready-to-drink beverages, and low alternative sugars are ripe for dismantled change — think cereals with better ingredients, ice cream with better-for-you formulas and new ways to use ingredients.
50% of people, across age groups, say healthy eating is a top priority for them, especially after COVID-19. For this half of the population, healthy eating means reducing the consumption of processed foods and sugar, as well as fat, salt, and, for some, red meat. It’s for this reason we’ve invested in companies defying the status quo as it relates to food products and wellness.
Our investment in OffLimits broke the rules by combining fun and flavor to cereal, without the artificial ingredients commonly found in other name brands. Our breakout hit Liquid Death recently launched a line of iced tea lightly sweetened with agave and infused with vitamins.
When it comes to gut health, we’ll see an uptick in functional medicine doctors as more and more people become advocates for their own health. And consumers are much more conscious about what they put in their bodies and how the products help improve their lives — mentally, emotionally, and physically.
We’ll continue following these trends as chronic and acute health, as well as nutritional health, will lead us to more direct investment in the next wave of CPG brands. We’re most interested in high-frequency use products that are a daily practice.
We’re also deeply invested in products that can be personalized. One-on-one personalization is key to our list of CPG trends for 2023. Gone are the days of one-size-treats-all; the trend of customization accommodates new consumer preferences. Every consumer is different, and they’ll need their own regimen of supplements, pills, and products.
This outlook directly aligns with our investment in Wisdom Health, a holistic wellness program for women to treat autoimmune and hormone issues — two often misdiagnosed and misunderstood conditions.
Consumers expect a personalized, online experience and are more likely to show an affinity for brands that can deliver something meaningful, relevant, and tailored to their specific needs
CPG brands are shouting on social
Product efficacy and loyalty aside, video content will remain a powerful marketing tool and will only continue to grow in importance for CPG brands in 2023.
The continued rise of TikTok, YouTube Shorts, and the algorithmic preference for video content across all social media platforms makes it crucial for brands to have a strong video marketing strategy. In 2022, we invested in 12 companies and are doubling down on DTC-centered brands that understand the value of organic social growth.
We saw this early on with Liquid Death. If you combine Instagram and TikTok (the two biggest social platforms), Liquid Death is the third most-followed beverage brand in both the alcoholic and nonalcoholic categories. The brand was able to harness the power of social to elevate its staying power, and we’ll see much more of this with other CPG brands.
Mammoth Media, a Science-backed digital media company creating TikTok campaigns using blockchain tech for over 200+ brands (such as Liquid Death) connects brands, influencers, and consumers through digital experiences and converting views into retail transactions. The next CPG and retail verticals will transition to using blockchain tech to help revitalize and engage their consumer base, and we’re very bullish on this mass adoption.
In 2017, Science portfolio company Famebit (now Brand Connect) was sold to YouTube — and we’ve seen a huge evolution between now and then as more audiences, as well as younger audiences, utilize TikTok in the same, personalized way for social connection. We can also highlight the authentic storytelling that has come through other investments.
EMPIRICAL receives praise for behind-the-scenes content including where the company sources ingredients for its spirits, people on the team, and how they mix drinks while launching a “Flavor Up” series on YouTube for mixing drinks with brand collaborations.
The Good Patch, the wearable wellness patches, also do an outstanding job keeping up with pop culture, and relevant memes, as proved by their growing TikTok following of 114K.
Digital marketing will also continue to be a key driver in CPG industry trends in 2023. Brands that personalize their marketing efforts, create engaging video content, partner with social media influencers, optimize their e-commerce presences, and prioritize customer feedback will find themselves better positioned to gain market share and adapt to changing conditions in the coming year.
We’re fortunate that we have unique strengths as a VC studio. We don’t just write checks, we rewrite entire trends. Our portfolio founders receive ongoing support from over 20 Science employees whose job functions consist of Paid Media, Legal, Data Analysis, Finance, Growth, Digital Content Creation, and more.
The time from D2C seed investment to exit for Science is around five years. The studio resources and extra human capital we provide allows us to help build, grow, and fundraise our portfolio companies more quickly than what you typically see — usually by about 1–2 years.
If any of this sounds of interest or you are looking to partner or discuss an investment opportunity, reach out to investors@science-inc.com. We’d love to hear from you.
