Health products used to be very much a niche industry. In the UK, however, Hip Pop is now the country’s fastest-growing carbonated soft drinks brand – and leading a market for “functional drinks” that itself has grown 10 times’ faster than the soft drinks market as a whole over the past year. Hip Pop, which launched a major overhaul of its brand earlier this month, is hoping to sell up to 10 million cans of its gut-friendly, low-sugar sodas and kombuchas this year.
“Consumers are wising up,” says Emma Thackray, who co-founded Hip Pop in 2019 with an old friend, Kenny Goodman. “They’re looking for healthy products that taste great and feature real ingredients rather than artificial sweeteners and other chemicals; that’s what we offer.”
Hip Pop started out as a kitchen-table business in 2018, with Thackray and Goodman selling their original kombucha product in farmers’ markets across the North-West of England. By their own admission, they weren’t sure about what they were doing commercially. “The first chapter of our book would be entitled ‘How not to start a business,” says Goodman, with the company struggling to ramp up production and to build a compelling brand.
One turning point for the company came when they met Juliet Barratt, co-founder of the high-profile sports nutrition company Grenade, which was sold to international consumer products giant Mondelez for around $275 million (£200m). One piece of advice she gave the company was to find a stand-out name – the business, previously trading as Booch & Brew, became Hip Pop in 2021.
The Grenade connection has continued with Hip Pop hiring Graham Beale, previously its head of operations, two years ago. “We’ve brought in a professional CEO at quite an early stage compared to other start-ups, but Kenny and I know what we’re good at,” explains Thackray. “Graham’s role means we have more time to focus on the product, on our culture as a business, and on finding the right partners to work with.”
One of those partners is Sainsbury’s, the supermarket chain, which accepted Hip Pop to its Future Brands incubator programme. That saw the company get a range of practical advice and support on how to work with large retailers – and gave it an opportunity to sell in Sainsbury’s nationwide network stores. The company’s products are now stocked in a wide range of grocers and retailers, including M&S, Ocado, Co-op, Waitrose, Fortnum & Masons and Booths.
Sales have increased rapidly over the past couple of years, boosted by its retail distribution and a move into the food service space, with deals with partners including Total Fitness and Zizzi. Hip Pop has also begun exporting, selling in stores across Belgium and the Netherlands. A strong direct-to-consumer business is another important revenue driver.
The value proposition comes back to the product, Thackray adds. “Millions of people are looking for support with digestive health issues, but they also want a product that tastes good,” she says. “They want something refreshing and light.” Hip Pop creates its sodas and kombuchas with those imperatives in mind, with its range comprising 100% natural ingredients; the products are vegan-friendly and low calorie.
This month’s rebrand seeks to capitalise on this appeal, with an updated design for the company’s cans and a new strapline, “Get Real”, which is designed to highlight the product’s natural ingredients and to encourage consumers to think harder about what they’re drinking.
“People in the Western world have become addicted to sweetness, and that has seen artificial products become ever sweeter,” Goodman adds. “Our drinks still taste fantastic but they’re genuinely low-sugar and we haven’t replaced that with artificial sweeteners.”
The company believes it has a strong opportunity to develop a market-leading brand in a market now beginning to attract attention from larger consumer groups. In the US, for example, Coca-Cola has just launched Simply Pop, its first foray into the gut-health sector. “We’re trying to build a category here,” adds Goodman. “We’re genuinely delighted to see Coca-Cola’s launch because it underlines the potential for this category.”
In time, the business may look to raise institutional financing but has so far grown with the support of business angels including Edward Ferris, who built the jewellery business Burrells, Paul Brown, formerly of Innocent Drinks, and Phil Trowler, formerly of US functional drinks brand Olipop.
Read the full article here
