Coke leads $15M investment round in Dirty Lemon parent Iris Nova

Dive Brief:

Iris Nova, the company known for consumer goods that can be purchased via text message, announced a $15 million round of seed funding in a news release. The minority investment is being led by The Coca-Cola Company's Venturing & Emerging Brands unit and additionally includes a handful of venture capital firms.
The news makes Coke the startup's largest investor, according to Bloomberg. Iris Nova, which also names celebrities like Alex Rodriguez among its backers, has become notable for its SMS-based sales technology and the popularity of its Dirty Lemon beverage brand. The wellness drink line has steadily gained traction since launching in 2015, thanks in part to a strong presence on Instagram, per Bloomberg.
Dirty Lemon has sold more than 2 million bottles in three years, with 90% of orders being processed via text message, Iris Nova said. Iris Nova tests some its products through a cashierless retail concept called The Drug Store before scaling them nationally. The Drug Store debuted in Manhattan last year, and Iris Nova said it will introduce three additional locations nationally throughout 2019.

Dive Insight:

Coke leading the latest funding round in Iris Nova continues the beverage giant's hot streak this year of investing in buzzy companies that are keyed into what consumers, particularly millennials, want. In August, the marketer took a minority stake in BodyArmor, with the opportunity to fully acquire the sports drink maker further down the line. BodyArmor, which competes with Coke rivals like PepsiCo's Gatorade, has since nabbed some lucrative deals, signing on as the official sports drink of NCAA championships, including March Madness, in November.

BodyArmor and Dirty Lemon fit into the health and wellness category Coke has been pushing into as it looks to expand its portfolio of products beyond soda. Dirty Lemon's offerings, for example, boast ingredients like charcoal and turmeric, while BodyArmor differentiates itself from competitors as a premium sports beverage.

Investing in Iris Nova now does a bit of double-duty for Coke: Not only are brands like Dirty Lemon and The Drug Store proving popular, but the SMS-based technology powering them is keyed into how many retailers are thinking about the future. So-called "brick-and-mobile," cashierless retail concepts are steadily gaining traction as early experiments in the space, namely Amazon Go, start to take off and shoppers become more comfortable completing transactions via their smartphones.

As Iris Nova plots expansions for The Drug Store, Coke will potentially be able to draw insights into what's working for the fledgling brand when it comes to mobile commerce. Coke has recently stated that it wants to evolve its customer experiences "beyond the real thing" — a reference to an old tagline — by leveraging more digital and mobile technology.

Iris Nova has also previously dabbled in spaces that Coke has signaled interest in. The startup brand recently pulled a line of CBD-infused products to sidestep any potential regulatory scrutiny, according to Bloomberg. Coke in September reportedly entered talks for a deal to make marijuana-infused beverages with the Canada-based Aurora Cannabis, per Food Dive.