Sanzo raises $10m in Series A financing to bring authentic Asian flavors to crowded sparkling water category
Other participating investors in the funding round include Convivialite Ventures, Semillero Partners, Gold House Ventures, Kaya Ventures, and Francisco Crespo (former chairman of the board and chief growth officer at The Coca-Cola Company). Previous investors Mana Ventures, Outbound Ventures, and Hyphen Capital – whose mission is to support the next generation of Asian American founders – also participated in the round.
Launched in 2019 by Roco, a Filipino-American growing up in Queens, New York, Sanzo's mission is to make a significant dent in the $10bn+ US sparkling water category that's already flooded with many other brands and steady stream of new entrants.
"I noticed that the legacy Asian beverage brands were filled with sugar, preservatives, and artificial flavors, which stood in stark contrast to the 'clean' American sparkling water brands I was encountering in other retailers," Roco told FoodNavigator-USA.
"My goal with Sanzo from the very beginning has been to celebrate high-quality Asian flavors without all of the bad ingredients and extra sugar," added Roco, whose broader goal for the brand is to bridge the cultural gap between Eastern and Western cultures through authentic flavors (e.g. Alphonso mango native to India, lychee native to Southeast Asia, calamansi (a variety of lime) native to The Philippines, and yuzu native to Japan).
Sanzo's product lineup includes each of these aforementioned four flavors, which are formulated with fruit purée, carbonated water, and citric acid with 0-20 calories and 0-4g of sugar per can.
Its most recent flavor addition, Yuzu Ginger, will be launching nationally at Whole Foods Market (which ranked the lemony citrus variety as its #2 top food trend to watch in 2022) and other retailers across the US. Customers can shop all four flavors through the company's DTC website or on the brand's Amazon shop page.
"Sanzo not only resonates with the incredible buying power of Asian Americans, but it is also a really approachable step into flavors that some people might be less familiar with. Plus, you can actually see the difference compared to most other sparkling waters out there because Sanzo has faint hues from the real fruit we use," said Roco.
'Thoughtful' retailer strategy leads to 5x year-over growth in 2020 and 2021
Sanzo first launched into foodservice and local natural grocers in New York so that it could thoughtfully engage with consumers in its early days to understand how the product is resonating, said Roco, who also said this approach grew the brand to 2,000+ retailers including Whole Foods, Target, Erewhon, Panda Express, and online marketplace FreshDirect.
"What we learned quickly is that the customers of these retail partners were really excited to try and then repeat purchase a sparkling water that offered innovative, bold flavors and where there was an authentic connection beyond just a beverage," said Roco.
The emerging brand also struck a few Hollywood movie partnerships including Marvel's “Shang Chi and The Legend of The Ten Rings", which brought lead Asian-Canadian actor Simu Liu to the investment table.
"We’re actually gearing up to announce a collaboration with PIXAR, our third movie collaboration within a year that puts Asian characters center stage. The fact that we get to be part of yet another large milestone for the AAPI community is really surreal for our entire team," added Roco.
Sanzo achieved 5x year-over-year growth in 2020 (vs. 2019) and again in 2021 (vs. 2020), and over 30% repeat purchase rate in direct-to-consumer sales, charting its course to become a high-velocity staple.
Investors such as CircleUp Growth Partners, whose previous investments include Halo Top, Nutpods, Kettle & Fire, also believe in Sanzo's exponential growth potential.
"Sanzo stood out to us by delivering what consumers are looking for - innovative and bold flavors combined with a healthier nutritional profile and an authentic, rabid fan base," said Pat Robinson, CircleUp Growth Partners’ managing director, who will join Sanzo’s board of directors.
"The sales velocities and capital efficiency Sanzo have achieved this early on in its lifecycle, especially during the pandemic, demonstrated to us that there is something very special going on. Layering on the brand partnerships and cultural resonance of the brand, plus Sandro's vision for the future, we became even more excited to partner up and help him build the next iconic beverage brand."
Roco said that he intends to use the $10m cash injection to grow all core functions of the business, which has been hyper-efficient, bordering on stretched too thin.
"At the time of our close, our team was roughly one-quarter to one-half that of other high-growth brands, and I’ve been super proud of our team’s ability to execute and grow, especially throughout the pandemic. That said, with the distribution we have coming aboard, we need to grow all functions in our team, particularly our sales and marketing efforts, as well as our support functions such as operations," he said.
"We are also actively looking to add onto our existing manufacturing efforts, invest in new product development, and explore other formats that make sense for the brand."