Business

The Plot to Destroy Your Favorite Seltzer

Spindrift founder Bill Creelman wants to upend the seltzer industry and do for carbonated water what Sam Adams did for beer. And he’s starting by asking what the competition is really made of. —By Jeanne O’Brien Coffey

Photograph by Ken Richardson

On a brisk day just after the new year, Bill Creelman, founder and CEO of Spindrift, sets a shiny, unlabeled aluminum can on his desk at the seltzer company’s new headquarters in Newton. The unassuming gesture is ripe with anticipation: Inside is Spindrift’s newest flavor, Half & Half, a carbonated, unsweetened take on an Arnold Palmer. He pours the fizzy tea concoction into a pair of tiny plastic cups, like measuring a dose of cough syrup, and invites me to try it—under the strictest embargo, of course.

At first sip, it tastes bright and citrusy, like the company’s popular lemon flavor, but then the earthy hint of tea hits. It confuses my brain a bit—lemon, bubbles, tannins, absolutely no sweetness, but I find myself asking for another tiny taste, and then another. “I think this is our best and most daring foray into previously uncharted sparkling-water territory,” Creelman says with earnest seriousness.

There was a time when the phrase “new seltzer flavor” was as exciting as “worthwhile Canadian initiative,” but these days—with a coast-to-coast seltzer craze gripping the nation—it’s the stuff of high drama. When National Beverage Corp.’s LaCroix introduced its Key lime flavor last fall, for instance, the Los Angeles Times covered it like breaking news. Writers at national health publications have compared locating Polar Beverages’ newest seltzer release to winning the lottery and report people losing their minds over its “Impossibly Good” line, which includes conceptual “100% natural” flavors such as Unicorn Kisses and Yeti Mischief. When Polar drops a new creation, even this publication is among the first to taste-test it for a large, die-hard fan base.

Bubbly water is also big bucks. At the center of a perfect storm of hipster nostalgia and wellness mania, seltzer’s once fusty fizz has become the thing to drink. Retail sales have quadrupled in the past five years, to a whopping $8.6 billion annually, according to Beverage Marketing Corporation’s DrinkTell database. That’s helped bottled water as a whole outsell soda for the past two years. As Americans cut down on sugar, says Gary Hemphill, managing director of research at Beverage Marketing, “we’re projecting double-digit growth over at least the next several years as consumers continue to seek out healthier refreshment.”

You don’t need an analyst to notice that trend, though. In fact, chances are you’re already part of the craze. “Seltzer almost sells itself,” says John Craven, founder and CEO of BevNet.com. “Zero calories, no artificial sweeteners—kids drink it, adults drink it, older adults drink it.” LaCroix has been making exactly the same product since the 1980s, yet has weirdly and suddenly leapt to dominance with Miami Vice–colored cans and a carefully tended social media presence. Regional hero Polar Beverages has been pushing seltzer in New England for nearly 140 years, but now sells flavors such as Butter Rum and Champagne Strawberry to faithful fans. Even PepsiCo finally jumped on the bandwagon in a big way this winter, introducing its adorable Bubly during the Oscars.

In this environment, the relative upstart Spindrift is rapidly building its own fanatical consumer base. Revenues have grown 1,000 percent over the past 36 months, and Spindrift was on Inc. magazine’s list of fastest-growing companies in 2017. This year, Spindrift is planning to triple distribution to more than 25,000 outlets and reach 5 million cases shipped. Traditionally, you could find it next to the kombucha in ritzy sandwich shops and stacked on pallets at Costco. In February, though, the company added 10,000 Starbucks locations to its national distribution, which also includes Target, Kroger, and Whole Foods. “As a premium product, Spindrift is nicely positioned,” Craven says. “The lower end is a bloodbath, where 99 cents versus 89 cents matters, but Spindrift is on their own path. They can carve out a pretty big niche.”

Creelman, though, is looking for far more than a niche—he has his eyes on a revolution. While some in the seltzer world are happy that kids are swapping sugary juice boxes for cans of flavored Dragon Whispers, Spindrift is building its business on the industry’s unofficial third rail by taking a stand against the ubiquitous—but notoriously undefined—“natural flavors” that every other company uses to make its bubbly pop. “Our proposition is so simple—sparkling water and real ingredients—yet the reason no one has done this, ever, as far as we know, is because the production of it is incredibly complicated,” Creelman tells me.

How complicated? The company has invented new processes and technologies for each product, which means it’s selling cans for twice what the competition charges. Spindrift developed special jacketed silos to keep juice at the proper temperature—as well as a lot of proprietary technology it won’t even talk about. Because of complications ranging from seasonality to food safety, it can take as much as two years to develop a new flavor. Sometimes, as was the case with last year’s strawberry, it’s a hit. Other times, it bombs. As Creelman explains, when people see watermelon, they expect a Jolly Rancher—not something that tastes like the real thing.

Of course, no one said revolutions were easy. Creelman and his scrappy local company are betting they can do for seltzer what Jim Koch and Sam Adams did for craft beer: show people there’s a better way, turn the industry upside down, and transform tiny, tasty bubbles into big, American bucks.

 

Creelman’s quest to remake the seltzer biz began just over 40 years ago on a 30-acre farm in western Massachusetts. The son of a locavore mom, he drank unpasteurized milk, knew the person who made the family’s maple syrup, and raised vegetables in the garden. In other words, he was obsessed with where food came from long before it was cool.

The first attempt to turn that passion into a business was arguably a little ahead of the curve. After working on charter fishing boats on Nantucket after college, he founded Nantucket Harvest, which direct-shipped local specialties, such as bluefish pâté from the Straight Wharf restaurant, bay scallops fresh from the sea, and cranberry products, to customers off-island—a sort of insane reverse commute. “People love that type of product, but at the time they only bought it between Thanksgiving and Christmas,” Creelman recalls. “It was a very short season.”

His second attempt had stronger legs. Creelman developed a dry rub that begat a margarita salt, and it took off, eventually leading him to cofound a company making high-end mixers that aligned with the premium-spirits craze of the early 2000s. In a sea of Mr. & Mrs. T’s Original Bloody Mary Mix and Jose Cuervo Classic Margarita Mix, Creelman’s company, Stirrings, made the rare cocktail mixer with real ingredients. (Sound familiar?) By 2009, he had sold the brand for about $25 million.

Around that time, with a couple of young kids underfoot in his Charlestown kitchen, Creelman started to ask himself what was really in that can of Diet Coke he craved each day at precisely 2 p.m. “I wanted the solution to the soda problem,” Creelman says, adding that he sought a beverage he could feel good about giving to his kids. He started squeezing juice into seltzer and found something he wanted to drink—and ultimately to sell. By 2010, Spindrift, named for the white, foamy wake from a wave, had set up shop in an old Waltham factory and was selling its first products—a line of sodas made with real fruit and cane sugar in place of high-fructose corn syrup. It exploded like a shaken can of Sprite.

“In the early years,” Creelman says, “if the flavor wasn’t quite there, we just threw some ‘natural flavor’ in to see if that would help. After all, the beverage industry has used natural flavors forever.” When consumers noticed the oddly ambiguous ingredient, though, some started asking questions, at which point Creelman approached his flavor suppliers, many of whom he had worked with for years. What, he wanted to know, was he pouring into his beverages? “We went ’round and ’round,” Creelman recalls, “and at the end of the day these flavor houses will not tell—and they are not required by law to tell—what’s in ‘natural flavors.’”

Undeterred, Creelman and SVP of operations David Kimmell spent eight months trying to uncover the industry’s flavor secrets while testing new versions of their products without the so-called natural flavors. He was shocked by what he found. “Natural flavors,” he says, is basically a black box—a catchall term that can include 3,000 unregulated substances. Many consumer watchdog groups, including the Natural Resources Defense Council, assert that some of those substances can be pretty bad for you. In 2014, for instance, NRDC noted that chemical manufacturers are allowed to determine on their own if something they’ve invented is safe for human consumption. Over the years, NRDC reports, some of these companies have given thumbs-up to chemicals linked to deadly diseases such as prenatal leukemia. Creelman was determined to eliminate natural flavors. “We are not trying to cast judgment,” he says. “We just could never get comfortable with what they are. We don’t know, even today, what they are.”

Not long after, in 2015, Spindrift was named Carbonated Beverage of the Year by BevNet.com. Then Creelman showed brash CEOs everywhere what real chutzpah looks like: He abandoned Spindrift’s already profitable soda line, walking away from millions of dollars in revenue, to concentrate on seltzer. Even crazier? He practically doubled his costs by banning natural flavors from his budding bubbly kingdom. “It’s been painful,” Creelman admits, but worth it: “Once you have incredible ingredients, you just don’t need a lot of the shit that goes into these other products.” Noble, yes, but how many other people feel the same way?

 

In some ways, what Creelman wants to do would bring seltzer full circle. Sparkling water actually started out as a health beverage, says Barry Joseph, who will release his book Seltzertopia later this year after more than 14 years of research. The name comes from the German town of Niederselters, where spas of naturally sparkling water drew adherents during the 1700s. Closer to home, Saratoga Springs, New York, about three hours directly west of Boston, attracted people to “take the waters” (from what happened to be a lithium-heavy spring) to treat ailments from indigestion to depression.

It didn’t take long before commercial producers started adding minerals to mechanically carbonated water to mimic the salubrious effects. By the end of the 19th century, though, the landscape lay practically bare, reduced to industrially carbonated water. The soda industry grew from adding syrup to commercially carbonated filtered water. It wasn’t until the 1980s that companies started bottling flavored seltzer, Joseph says. Original New York Seltzer, the first major flavored seltzer company, was an immediate success. “Within the first few years, they were making $100 million,” Joseph says, “and they had transformed the industry by doing something that had never been done before.”

And so it remained for more than 30 years, when all of a sudden seltzer became wildly and confusingly hip. It’s hard to say exactly why—as soda sales came crashing down, LaCroix was poised with its social media marketing campaign and a slate of flavors such as Pamplemousse to scratch the itch for a bubbly drink without the baggage. “We as consumers have been beaten over the head with the idea that sugar is bad,” says BevNet’s Craven. “Big soda companies haven’t had a great answer to that—it’s hard to sell diet soda as a healthy beverage.”

In business since 1981, LaCroix soon emerged as the clear early winner of the new craze, yet some experts say the company is starting to lose ground to local favorites. Polar, in particular, has seized consumers’ loyalty with both hands, touting designer flavors and new products like Seltzer’ade, a line suggesting lemonade mingled with fruits such as mango and blueberry. Their efforts have inspired a rabid following here—when a limited-edition flavor drops, the shelves at Market Basket look like the bread aisle before a nor’easter. A package of four tiny cans of Polar’s Unicorn Kisses flavor was available in April on eBay for $17.79. Last year, a case of 24 cans cost just $12. And people are buying it. Even trendy restaurants are on the bandwagon—Sweet Cheeks owner Tiffani Faison convinced customers to pay $40 for a flight of the four mythical Seltzer Juniors last summer, served with four nips of vodka—though that might have been more for the novelty and the Instagram shot than for any love of the taste.

Of course, as Creelman delights in pointing out, for all we know there may be no more actual raspberry or lemon in a can of Polar than there is unicorn. Developing a new “natural” flavor takes months, not years, and leans perhaps more heavily on marketing and social media than on taste. Spindrift is betting big that quality will beat novelty in the long haul. For that plan to work, though, Creelman has to show consumers there’s something better than the cartoon-character versions of raspberry, lemon, and lime that we all know and love.

 

Last summer, I watched Creelman whip up a test batch of a new flavor. It was as simple as juicing some pineapples along with mint, adding water, then pouring it into a pressurized tank that pushed CO2 into the beverage. (“Mint remains very fussy,” Creelman says, so don’t look for that flavor on shelves anytime soon.) This kind of trial and error is about as complex as it gets, he tells me. “Creating a new product is much more like food preparation than it is like synthesizing any kind of mysterious flavors into a petri dish,” Creelman explains in the test kitchen of the Newton offices that the company moved into this past winter. “It really is as intuitive as ‘Can I squeeze this pineapple and get enough juice and not get too much pulp?’ A lot of that can be done just by bringing in a pineapple and cutting it up to see what happens.”

Going from concept to soda can is pretty much the same, only bigger—I’m told there isn’t much in Spindrift’s canning plants that I wouldn’t recognize from my own kitchen—but that doesn’t mean it’s easy. The innovation and intellectual property come more in the sourcing, handling, and processing of those fresh ingredients—managing the pulp, for instance, or controlling for contaminants. Spindrift sources produce exclusively from the United States, with the exception of mangoes, which they couldn’t find in the quantity they need domestically. That’s hard and it’s costly—and Creelman hopes his IP will give the brand some protection as it grows. Scale that up, and the risk gets bigger.

The biggest risk, though, is in guessing whether customers will find vine-ripened flavor refreshingly new or just jarringly different from what they were hoping for when they popped open the can. “I can’t control what people will like because flavor is so subjective,” Creelman says. And that, more than anything, is what he’s up against—years of fake flavors rewiring our expectations. After years of expensive research, Spindrift has seen a flavor full-on tank when it hit the market.

The now-defunct watermelon flavor, for instance, “in no way failed on the promise of real watermelon,” says Kimmell, the SVP of operations—but it was a huge learning experience for the brand. “People’s expectation of what a watermelon should taste like and what a real watermelon tastes like are two very different things.” Watermelon tastes earthy and owes more to a cucumber than a neon-colored Jolly Rancher hard candy, but Kimmell says Jolly Rancher is what people wanted. Creelman learned that you can’t get too far ahead of people’s expectations.

Luckily, for all of Spindrift’s scrappy façade, it can afford to make a few mistakes. In March, the company raised $20 million in new funding, led by VMG Partners, a private equity firm that has backed food brands including Kind bars and Pirate’s Booty. The downside to that, if there is one, says BevNet’s Craven, is that those investors will eventually want their money back. That means before Spindrift ever reaches what may be the limits of its growth, he thinks Creelman might sell the company to a major beverage player.

Like Sam Adams’s Jim Koch many years ago, Creelman seems to be hitting his niche market at exactly the right moment. Nadia Berenstein, an author and “flavor historian,” says she’s seen a backlash bubbling up against chemicals and fake flavoring, with even some brands of cheese puffs (that platonic ideal of junk food) trumpeting no “fake natural flavors.” The branding is a reaction to the tide of contradictory information about what’s really good for us. “People are desperate to feel like they are making safe choices,” Berenstein says, “hoping that they’re not going to read next week, ‘Oh my God, that seltzer that I switched to is full of natural flavors, which are essentially chemicals, and everyone knows you are not supposed to eat chemicals.’”

Creelman is hoping that might be enough to catapult Spindrift from fan favorite to industry champion, but he tells me the stakes are higher than his bottom line. “If you’re not careful, kids are not going to know what a real watermelon tastes like,” he says. If that’s not worth a revolution, what is?

Correction: An earlier version of this story misspelled Nadia Berenstein’s name.