文/trevor clawson
Air up co-founder Lena Jungst Image source: Air up
You can think of it as something novel. It's a premium water bottle that tricks people's senses into thinking they're drinking something tastier than the average old-fashioned H20.
However, Air up has just completed a €40 million Series B investment designed to help the company expand its market and redefine hydration. In addition, in addition to five seasons ventures, ippen media and oyster bay, the investment was led by Pepsico. PepsiCo is known for producing sugary drinks rather than water bottles.
So when I spoke to Air up co-founder Lena Jungst, I was very curious to know how a company operating in an overcrowded market of high-end water bottles not only attracted sizable investment, but also won the support of one of the world's major beverage companies.
Industry know-how
If you think back to your biology class at school, you've probably at least been told about the overlap between taste and smell. While the basic tastes – sweet, salty, sour, bitter and umami – can all be felt on the tongue, we can also perceive the taste through the nose. "In fact, 80 percent of our sense of taste is determined by smell," Jungst said.
A byproduct of the blurring of sensory boundaries is that our senses of taste can be manipulated. It was the basic idea that prompted Jungst and co-founder Tim Jäger to study the possibility of deceiving the brain as part of the university's product design curriculum.
The idea is that adding fragrance to the process of drinking water has the potential to convince a person that he or she is drinking something completely different, such as orange juice or cola. A satisfying taste – but really just drinking water. "We think this could trigger healthier behavior," Jungst said.
Fast forward to today, a scientific design concept has become a mature product, which has been sold to more than 1 million customers. Since its launch in 2019, what consumers have been buying is a bottle and small drum containing a range of scent recipes designed to evoke taste.
Evolved into a product
So how did the company get to where it is today? In some ways, it's a slow process. After completing the thesis, Jungst and Jäger separated for a while, and it wasn't until a chef friend in Amsterdam expressed interest that the project began to take shape.
A feature of the company's progress is the willingness to expand the founding team including Jannis Koppitz and Simon Nüesch. "We grew into a team of 5 people — all from different backgrounds," Jungst said. This slows progress, but each member can use his or her experience and expertise. Jungst says this has always been an advantage. Recently, an experienced general manager was appointed.
The initial investment came from angel investors who participated in the German version of shark tank (the British version of dragons' den). "The first investment was a milestone," Jungst said.
A risky move
The first pilot production was a bit of a risk. "We produced 80,000 bottles, but we don't know if they can be sold," she said. "In fact, it sold out in six weeks."
Initially, sales were mainly made online. Jungst said: "This is mostly driven by PR. "Journalists love this innovation, and we use influencers."
Perhaps not surprisingly, the company's customer base — at least initially — is made up of 18- to 34-year-olds — a health-conscious group that notices the environmental damage that disposable water bottles do, and arguably open to the novelty of water bottles, thinking it can make the water inside taste like a flavored drink. "In the beginning, people were curious," Jungst said. In addition, the product also attracts buyers with health problems such as diabetes.
The market has evolved. The customer base is young people aged 18-25, and the company has also expanded its market channels. In addition to its own online store, it sells through online marketplaces and offline retail, while also expanding its business from German-speaking countries to regions such as the UK.
Surprise buddy?
Speaking of the latest round of investments, Jungst is clearly positive about PepsiCo's interest.
"When they knocked on our door, it was a happy moment," she said. But it's also a confusing moment? PepsiCo sells many flavored, carbonated drinks in plastic bottles. Is this appropriate? In Jungst's view, the partnership with Air up will help the U.S. company diversify and no longer use single-use plastics. "It knows they have to stay away from plastic," she said.
This may at least illustrate the current forces sweeping the consumer market. According to popular accounts, Generation Z cares more about health and environmental impact than the previous generation. Younger companies are riding the wind, and established companies have to take note of this. In fact, in a press release promoting its investment, Five Seasons Capital emphasized that air up sales to date could save as much as 85 million single-use plastic bottles and more than 2.465 tons of sugar. These are seen as the main selling points for consumers.
At the same time, Air up is planning to enter the U.S. market while also bringing manufacturing closer to home — Turkey, to be precise. The goal is to create a sustainable supply chain.
Does air up go beyond novelty while also providing health and environmental benefits? Just look at the company's Facebook page and you'll see that some customers like the product, while others are disappointed. But the growth to date — with five seasons citing revenues operating at more than 100 million euros — suggests that consumers are open to innovation. New consumption patterns, led by Generation Z, are taking shape.
Trevor Clawson is a Forbes contributor and expresses opinions on behalf of individuals only. Translated by Stephen