Macy's follows JCPenney. Tapping kombucha. The history of milk. 
CB Insights celebration

Beyond beer

Hi there, 

Is the future of beer... less beer?

Probably not, but today's global alcohol conglomerates may have gotten so big that there's nowhere for them to go except for into new industries. 

And they're paying to open new doors. 

This week, beer giant Molson Coors acquired kombucha startup Clearly Kombucha, while Heineken launched a new initiative, Draft for Home, to deliver cold brew coffee and kombucha alonside beer. 

This is just the latest evidence of alcohol companies diversifying. 

  • AB InBev hopes that its low-alcohol and non-alcoholic business will represent 20% of global sales by 2025, from 8% today. Last year it began selling teas through an agreement with Starbucks' Teavana, and in July it acquired organic energy drink startup Hiball.

  • Heineken launched a zero-alcohol beer last year, which it has continued to expand. 
  • Constellation Brands spent roughly $191M to acquire 9.9% of Canopy Growth, a Candian marijuana company, last October. 
  • Molson Coors, aside from its acquisition of Clearly Kombucha this week, invested in chai startup Bhakti Chai last year. 
  • Diageo, which owns Guinness, Smirnoff, and other brands, invested in Seedlip, a non-alcoholic herbal spirits startup.  

What startups might become future targets for big alcohol? I'd keep my eye on:
  • Kombucha startups: Health-Ade (with $35.25M raised), Humm ($24.7M), and Revive ($9.6M) are the three most well-funded today. Revive has ties to coffee as well, since it's backed by Peet's (owned by JAB), so it could be doubly interesting to alcohol players. 
  • Cold brew startups: Coffee could help alcohol companies engage shoppers at new times of the day and open the door for new types of mixed drinks. Startups here include Rise and High Brew
  • Smart distribution technology: Complex regulations make e-commerce tricky for alcohol companies in the US. But, we still see players looking at delivery (such as AB InBev's investment into drone startup Starship) and connected points of sale (AB InBev's WeissBeerger acquisition). We may see more deals focused distributing through bars, restaurants, offices, concerts, events, and on-demand. 
  • Herbal beverages: Like Hiball and Seedlip, healthy beverage startups such as SpindriftQ Drinks, Mati Energy, and Live Soda could be attractive targets. 
  • Cannabis: Legalized cannabis could seriously threaten the alcohol industry — or it could benefit companies that hop on the trend. Constellation Brands' stock jumped after its cannabis investment, and other alcohol leaders may be inspired. 

Stay hungry,


Deal of the Week

Macy's came late to the retail reinvention party. But yesterday, it made its first ever US startup investment, acquiring a minority stake in B8ta.

(Macy's only disclosed previous investment was into Chinese e-commerce platform VIPStore in 2012). 

B8ta initially launched in the Bay Area as a brick-and-mortar outpost for digital-native brands. It aimed to let shoppers test out new gadgets in person before buying them later online; B8ta made money by charging brands for in-store real estate, rather than through sales. 

Now, Macy's plans to use B8ta's platform to enhance its shop-in-shops. 

This strategy could help Macy's in the short term. Rival JCPenney, for example, has found success in its Sephora shop-in-shop partnership, and it just announced plans to expand a similar partnership with Fanatics. 

Over the long term, though, it's risky to build your business atop another company.
CB Insights Hits 

What Is Psychographics? Understanding The ‘Dark Arts’ Of Marketing

Although it came to light with the Cambridge Analytica scandal and 2016 US presidential election, psychographic marketing may be even more effective in commercial rather than political advertising. And it's already more prevalent than you might think. Read the report. 
News & Views

Notable deals

Reinventing the basics. D2C subscription tampon startup Lola raised a $24M Series B, bringing total funding to $35M. It moved into sexual care products earlier this year and now plans to further expand its product offerings. 

Breakfast tech. Birch Benders, a "micro-pancakery" selling organic and non-GMO pancake mixes, raised $5M. 

Drone deals. Drone delivery startup Starship Technologies raised $25M, bringing total funding to $42M. Starship is backed by a few major corporations — Swiss Post, Daimler, and ZX Ventures (AB InBev's venture division) — and its robots already deliver food in California. 

Winning at the curb. Japanese e-commerce leader Rakuten acquired Curbside for an undisclosed amount. Curbside helps retailers with mobile commerce, including by enabling click-and-collect and tracking shoppers' locations. Curbside had raised $34M and works with CVS, Nordstrom, Sephora, and other leading retailers. 
Deal Street Asia

Keep it tight. Heist, a direct-to-consumer tights startup, raised $4.4M. 
Fashion United

Brain hacking. IQ Bar, a Boston-based startup creating brain health-focused snack bars, raised $0.4M. IQ Bar uses omega 3's, Vitamin E, and other ingredients it says can boost brain functionality.

New funds. Primary, a VC fund focused purely on NYC-based startups, has raised a new $100M fund. Primary has backed CPG and e-commerce startups such as, Coupang, and Ollie. 

Recent news & perspectives

The Facebook ad bubble? As D2C startups multiply, they're driving up Facebook ad prices. Now, startups are beginning to shift ad spend away from Facebook toward other, sometimes more traditional channels. 

Hotels vs. influencers. Luxury hotels can receive 5-20 requests per day from self-titled "social media influencers" asking for free hotel rooms and other perks. Some of them are fighting back. 
The Atlantic

Happy birthday. On the one-year anniversary of Amazon acquiring Whole Foods, Bloomberg examines Amazon's grocery strategy.

Thank god it's not 'blockchain.' Global breakfast chain IHOP (International House of Pancakes) announced it's changing its P to a B, standing for "burgers." The move emphasizes the chain's push into dinner. 

Health is the new handbag. Instagram-focused fitness gurus are building business empires, led by 26-year-old trainer Kayla Itsines.
Business of Fashion

Will humanity ever beat balding? Hair loss prevention startup Hims has grabbed headlines and raised $47M, but it's not the only player using new technologies to tackle the age-old issue of male hair loss. 
New Yorker

Another balding article. Racked compares the branding strategies of Hims, Roman, and Keeps — three startups trying to reduce the stigma surrounding male health issues.

Scribble on your skin. Crayola launched a new line of colorful, crayon-shaped makeup products in 95 colors. 

And one more thing... 

"Butter-eating barbarians" is not just a fun phrase to say; apparently it used to be a serious insult.

Ancient Greeks, Romans, and Londoners all used to look down on milk drinkers and butter eaters. Find out why. 

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