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Microdrink startup Waterdrop expands in US, looks to move global

Australian beverage startup Waterdrop has raised €60 million ($70 million) in a Series B funding round led by Singapore-based investment firm Temasek. The startup, which makes microdrinks — water-soluble, sugar-free cubes packed with plant-based wellness ingredients — said it will put its new funding toward R&D as well as continued expansion globally.

Currently, the company offers four flavors of its microdrinks, all touting different functional benefits through the use of ingredients such as elderflower, acai, ginger, ginseng, aloe and lemongrass. Boxes of each flavor are sold in an individually-packaged cube format to enhance the sustainability of these products as compared to other beverage options.

According to the company, it is not only functional beverages that are giving it a leg-up over other competitors, but the way in which it sells its products allows for consumers that are interested in hydration to simultaneously lower their carbon footprint. “Waterdrop eliminates up to 98 percent of unnecessary packaging and CO2 emissions compared to the transport of traditional bottled drinks,” the company said in a statement.

Despite these strides toward reducing its carbon footprint, the company’s packaging still packages its individual microdrink cubes in plastic to enhance shelf life and prevent the deterioration of the product's quality. While single-use plastic can be made from recyclable polymers, it is not always accepted in curbside collection programs.

By offering sustainability and functionality in its beverages, Waterdrop is tapping into two major trends, and its growth is reflective of the success of this approach. Last year, following five years of 400% year-over-year growth in Europe, the company launched its products in the U.S. Growth continues to remain a focus for the company, and in 2022, the company aims to triple its revenue from its $10 million (€881,329) in sales earned in 2021.

Waterdrop's lofty aims are pitting it against some major players in the beverage space as the microdrink market has seen an explosion of interest in the last several years. Major companies like Nestlé are getting into the game through the acquistion of the microdrink company Nuun, a company selling dissolvable hydration tabs. Startups such as U.S.-based LifeFuels, which creates sugar-free, zero-calorie and electrolyte-filled pods, have emerged. And there is even variety withing the segment from companies like Tea Drops, a recently-funded startup that creates “bath bombs for tea.” 

This emerging functional drink segment exists alongside other major markets such as functional water, which offers many of the same benefits of these microdrink options, except it comes fully prepared in bottles — water included.