A new entrant in the sports drink market is ready to compete with Gatorade and Powerade with an angle and a hook not primarily focused on athletic performance and pre and post-workout fuel.
Hydrant, co-founded by Oxford-trained biologist John Sherwin and Jai Jung Kim, who worked in private equity for McKinsey, is focused on keeping Americans hydrated, especially in the morning. The company claims that 75% of Americans are experiencing dehydration every day, and Hydrant's powder-based mix, stirred into eight or 16 ounces of water, has four times the electrolytes and 80% less sugar than your typical sports drink.
The NBA's Philadelphia 76ers believe in this product started by the two 29-year-olds in 2017, and have brought Hydrant into its Innovation Lab, investing money, time and management advice led by the lab's managing director Seth Berger, who co-founded American basketball and streetwear brand And1. Hydrant is reporting 10-times revenue growth since its soft launch on its website six months ago and is ready to slowly rolls out what is believes is an innovative player in the $28 billion sports drink stratosphere.
“Hydrant has a unique ingredient blend that allows you to absorb water and electrolytes earlier in your digestive system and that means you get hydration faster and more efficiently than if you were using a traditional sports drink or water," said Sherwin, whose company is marketing towards the 9-5 worker or the everyman looking for help with a jetlag, a hangover or the flu rather than an athlete. “Consumers are demanding healthier, more effective products to solve this hydration problem, and that’s where we’re delivering.”
Berger was introduced to Sherwin and Kim through a friend last fall and said his morning headaches went away when he brought Hydrant into his daily morning routine. He asked the Sixers' director of sports science to try Hydrant out, "and he said ‘oh yeah, this product works,’” Berger said. He then got to know Sherwin and Kim to determine whether the group would invest in the co-founders and the product, which the Innovation Lab ultimately did in November.
“John and Jai have this great combination of a sense of urgency but also a thoughtful, rational decision making,” Berger said.
The Innovation Lab, which only invests in six companies per calendar year, recently helped Hydrant close a $2 million funding round. What Berger and his team will do will give companies like Hydrant free office space, food, housing, legal advice for at least six months guaranteed.
"None of the companies that have come into the lab have left the lab except the ones that have been sold," Berger said. "We really are long-term partners.”
Why does a sports team feel compelled to have a startup incubator in the first place? Josh Harris and David Blitzer, whose sports and entertainment group owns the Sixers, the NHL's New Jersey Devils, Newark's Prudential Center, minor league hockey and basketball teams and esports giant Team Digintas, “realized that they not only knew what early stage companies needed to grow," Berger said, "but had the opportunity to really leverage the organization to make things happen really quickly. And they’ve done so.”
Berger said that in the last two years since it launched in July 2017, the Innovation Lab on paper has seen a 10-times overall return on their capital from their investments. He said the Sixers are not the first sports team to have a startup incubator but are still early on the trend. Other American sports teams with incubators or investment arms include the NBA's Milwaukee Bucks, the NFL's Dallas Cowboys, Denver Broncos and San Francisco 49ers and MLB's Los Angeles Dodgers, Berger said.
How do Sherwin and Kim plan to make inroads in an already oversaturated (pun intended) sports and energy drink market? They're banking on their different approach to solve what they call an enormous hydration problem in America differently than their competitors.
"Hydration requires consistent daily effort," Kim said. "And it’s really important to start this process first thing in the morning. And we aspire to be the number one morning hydration brand in America.”
Sherwin said the average American loses 2.5 liters of water over a 24-hour period, especially during sleep, and that drinking Hydrant every day when you wake up will go a long way towards replenishing yourself and feeling energized to start your day.
Hydrant is embracing this everyday mantra by selling its "rapid hydration mix" in packs of 30, which sell for $1 each (less if you buy in packs of 60, 90 or 120) on its website or on Amazon. Hydrant comes in lime and grapefruit and will soon roll out a blood orange flavored packet.
“As long as we make sure we’re solving it the best out of any product on the market," Sherwin said of America's dehydration problem, "business success will follow.”
Over the next six months, Hydrant is focused on growing its core demographic and really learning about its customer base, Kim said. Down the line, Hydrant may also start selling in select grocery chains, but are currently focused on selling from its site and Amazon. Berger said that the plan is to have the Sixers and Devils bring Hydrant into its own routines next season, as both the team, the incubator and the product itself try to shape themselves into peak daily performance.
