DTC’s Daily Digest brings you the latest news on the world’s fastest growing direct-to-consumer brands. In today’s edition: Sun Basket bucks meal subscription trend; TV businesses are chasing DTCs; Justin Bieber & Schmidt’s launch new deodorant.
Sun Basket bucks meal subscription trend
American meal kit delivery start up Sun Basket has raised USD$30m (£24m) in Series E funding. Repeat backer PivotNorth Capital led the round, which also included participation from Sapphire Ventures, August Capital, Founders Circle, and others. The round brings Sun Basket’s total raised to USD$125m (£99m) since it was founded in April of 2014.
Sun Basket said it will use the new capital “to further evolve into an omni-channel healthy eating platform” by broadening its offerings to include breakfast, lunch and dinner. It also plans to launch new food products and what it describes as a “highly personal AI-powered digital user experience.” The company also said it will aim to build “strategic partnerships that drive user acquisition and brand awareness.”
This news comes at an interesting time, as competitor Blue Apron consider delisting themselves from the New York Stock Exchange. This is after the business has faced challenges to its customer base from restaurant and grocery delivery services. What’s more, meal subscriptions cost companies a lot for companies to prepare, package, and ship, driving up meal prices. However, this news will come as a shot in the arm to the industry, and could provide a ray of hope for other meal subscription businesses.
TV businesses are chasing DTCs
TV companies, that once snubbed direct-to-consumer brands that didn’t have jumbo-sized ad budgets, are now chasing DTC ad dollars. DTC brands have been eyeing up TV, as they look to expand their customer base. DTC companies spent USD$2bn (£1.6bn) on TV in 2018, according to the Video Advertising Bureau.
With DTCs increasing the amount of TV spend, and beginning to achieve Unicorn-level valuations, TV networks realise they can no longer ignore this group.
The likes of NBCUniversal, Viacom, and CBS have built teams to go after this fast-growing sector. Given that DTC companies are performance-focused and don’t have TV budgets typical of big national advertisers, TV companies’ pitches revolve around their data, content, and audience.
NBCUniversal has a 10-person team dedicated to the category. It’s created a shoppable TV product that promises a way to make a direct link from advertising to sales. It also sells advanced advertising that lets performance-focused companies pinpoint audiences that are good targets for their products. It’ll also make them branded content.
In this way, NBCU is already working with 150 DTC companies and setting itself up to grow its share of DTC companies’ TV ad spending in 2019.
Justin Bieber & Schmidt’s launch new deodorant
Schmidt’s Naturals is launching a new line of deodorant with Justin Bieber, called Here + Now. Schmidt’s, which was acquired by Unilever in late 2017, typically sells its products direct to consumer to begin with, largely via their own website, before making their way into stores.
Michael Cammarata, CEO, Schmidt’s, says the business doubled sales last year and sees the acquisition by Unilever accelerating growth – disproving the suspicion that direct-to-consumer brands cash out when they envision their growth curves flattening.
Unilever has provided investment dollars and permitted global expansion in a year, something which might have taken five times as long as an independent, Cammarata says, or even had he stuck with his original plan of doing an initial public offering.
Cammarata also suggested that more celebrity partnerships would follow. This is unsurprising, given the amount direct-to-consumer brands rely on social, and the huge followings celebrities like Bieber command on social. This will mean that the content Schmidt’s are putting out through social will get a huge rise in reach, as Bieber will also be posting about the products.