‘Microdrink’ maker Waterdrop raises $70M

Dive Brief:

• Austrian beverage startup Waterdrop, which makes “microdrink” hydrating sugar-free cubes that dissolve in water, has raised 60 million euros ($70 million) in a Series B funding round, according to a press release emailed to Food Dive. Singapore-based investment firm Temasek led the round. Waterdrop plans to use the new funding on R&D and to continue its expansion in the U.S. and Asia. 
• Waterdrop also debuted the Lucy “smart cap” for reusable bottles that filters water through a UV-C system and deactivates up to 100% of potential germs, according to the company. The cap also flashes to remind the consumer when to drink, and comes with a mobile app to track water consumption.
• Waterdrop, which targets consumers looking for new ways to increase their hydration while lowering their carbon footprint through the beverages they buy, is now making a play for their concerns over the quality credentials of bottled water.

Dive Insight:

Waterdrop seeks to simultaneously increase the amount of water people drink while lowering the amount of plastic bottles used for consumption. In its press release, the company notes that over 500 million plastic bottles are manufactured each year. By switching from plastic bottles to Waterdrop pods and reusable bottles, the company claims consumers can reduce their CO2 emissions and plastic use by 98%.

“Our approach to the water business is to develop ecological solutions to promote responsible consumption of tap water and avoid the outdated idea of having to bottle and ship unsustainable and mostly unhealthy beverages,” Founder and CEO Martin Murray said in a statement.

Beyond sustainability, Waterdrop is also aiming to highlight the nourishment aspect of its product and encourage hydration. Its sugar-free microdrink cubes are made with fruit and plant-based extracts and come in four flavors, each containing trending wellness ingredients such as elderflower, acai, ginseng, cactus fruit and lemongrass. The company said more than 70% of its sales come from its direct-to-consumer channels, allowing it to better understand consumer desires and tastes.

With the Lucy cap and integrated app technology, Waterdrop has the ability to strengthen its connection with consumers. According to the company’s website, the cap tracks a consumer’s drinking habits and synchronizes it with the Waterdrop Hydration app.

Another company with similar “microdrink” flavoring and hydration tracking technology is LifeFuels. The Virginia-based company’s sugar-free and zero-calorie “elixir” pods contain electrolytes and are sold in a variety of flavors such as tropical punch and sweet tea. It had reportedly received a $20 million investment from Keurig Dr Pepper and launched a smart nutrition bottle that tracks consumers’ hydration and nutrition goals in 2019. LifeFuels briefly shuttered its business in 2021, citing pandemic-related difficulties, but restarted operations after being acquired by Utah-based water bottle company Infuze Hydration, Technical.ly reported in October.

The microdrink market has seen increased interest from Big Food companies and startups over the past few years. In 2021, the health science division of Nestlé acquired Nuun, which provides dissolvable hydration tabs aimed toward athletes. And Tea Drops creates “bath bombs for tea” that contain organic ingredients, and promotes ethical sourcing and sustainable packaging. The woman-owned startup had a $5 million funding round this past May, and has raised $7 million to date, per Crunchbase.

Waterdrop’s focus on helping consumers increase their water consumption in a sustainable, safe way could help it stand out. In recent years, the purity and quality of bottled water has been thrown into question, with separate investigations finding contaminants such as arsenic and microplastic particles in private and major branded products.