Funding Round Gives Drakes Organic Spirits a Shot of Growth
Two years after it launched, Drake’s Organic Spirits remains on a fast-track for growth.
The company has gone from $350,000 in revenue in 2017, when it launched in August at Lord Fletcher’s in Spring Park, to generating over $5 million this year. Next year, the company expects to pull in more than $100 million in revenue.
In its second fundraising round, Minnetonka-based Drake’s Organic Spirits raised nearly $7 million. Initiated at the start of 2019 and recently completed, the round drew about 82 investors. Local business legend Lyle Berman, known for casino investments, led the round (and later joined Drake’s board of directors).
The company will use proceeds from the raise to help ramp up production of a new item: freeze-and-eat adult ice pops, called Spiked Ice. The freeze pops started as alcoholic sorbet push-pops, made only for promotional reasons. Drake’s launched the “buzz pops” at Coachella and earned a nod from BeyoncÃ© on social media.
Praise from the pop goddess boosted Drake’s social media following—the company currently has 170,000 Instagram followers—and caught the attention of Costco.
“[Costco] liked our product but they wanted to create it shelf-stable, meaning it could be sold at room temperature like an Otter Pop,” says Drake's founder and CEO Mark Anderson.
So, last December, Anderson and his team tweaked the recipe into an adult Otter Pop and presented it to Costco in January. Costco ordered 100 million units.
To fulfill the order, Anderson commissioned a machine to be built that could mass produce and package the Spiked Ice pops—which like Drake’s beverage items, have all five certifications: non-GMO, gluten-free, vegan, Kosher, and organic.
Production on the pops began in June. The capital from the recent funding round will be used to finance five more of the same machines to meet the rest of Costco’s order and demand from other retailers.
Spiked Ice has so far rolled out in Costcos in San Diego, Arizona, and Colorado, and in Target stores in Illinois, as well as in other grocery stores in California. Just in September and October alone, Drake’s secured 512 new locations to sell its Spiked Ice. In Minnesota, the pops are available in about 100 locations throughout the state. The rollout will continue, including ultimately to all six of Costco’s regions.
And the Spiked Ice isn’t the only Drake’s product that’s growing in market presence.
The company’s new spiced rum has begun rolling out in Costco stores in California and will roll out over time to Costcos nationwide. Drake’s suite of beverage products can be found at about 500 locations in Minnesota, in more than 10 states in the U.S., and even internationally, including Canada, and soon Mexico and Japan. Drake’s also introduced this year a line of organic mixers, including for mojitos and Bloody Marys.
“There’s a consumer trend that wants low calorie organic mixed drinks, and a lot of bars are mixing with high-fructose corn syrup,” says Anderson. “They didn’t have accessibility to high-end organic mixers, so we started making them at the beginning of this year.”
Still, the Spiked Ice remains the heart of future growth.
“It’s really the thing that’s taken off and [been] our home run,” says Anderson.
Anderson expects that from just the Spiked Ice, once delivery is complete on the Costco contract, they’ll rake in $5 million in the fourth quarter of 2019. In 2020, he expects Spiked Ice revenue alone to be between $50 and $100 million, with the roll out in all the chains it’s struck a deal with so far—not to mention, the deal to be exclusive freeze-and-eat pop brand of a Charleston-based but nationally-growing adult ice cream truck business, Booze Pops. (In addition to exclusive market claim, the partnership involves Drake’s helping bring Booze Pops fleet of franchisees trucks to about 50-100 vehicles.)
Says Anderson: “2020 is going to be a very, very busy year.”