Kara Goldin already liked the fact that the entire supply chain for her Hint Water brand was situated in America, from her bottle suppliers to the label makers to a network of eight filling plants operated by contract manufacturers and scattered across the country.
Then Covid-19 hit, and the founder and CEO of San Francisco-based Hint Water was even more grateful to be completely “made in America.” And now, as the independent company with nine-figure revenues leans further into its battle with Coca-Cola and PepsiCo for domination of the booming bottled-water market, Goldin intends to find new ways to leverage an advantage that rather suddenly is more of an edge than ever.
“Being able to produce as locally as possible is critical these days,” Goldin told Chief Executive. “And that spans across multiple industries, not just foods and beverages.”
The importance of having tight and completely domestic control over her supply chain came to Goldin dramatically at the end of March, when Costco Warehouse Stores called her company seeking to bring Hint Water – the most popular flavored water, infused with fruit essences and available in ‘still’ and sparkling forms — into its stores.. Costco’s supplies of some other waters abruptly had been choked off because their supply chains depended in some way on China or Europe, and factories and logistics networks overseas were being shut down.
“Costco said, ‘Do you do everything in the United States?’” Goldin recalled. “And, ‘Could you guys do a national deal with us?'” She added: “They remembered us always talking about doing everything in the United States because the turnaround times were faster, but we had never thought of that as a factor that could get us more business. We had kind of thought about it, but we didn’t have any hard-core evidence that it mattered. We would put it in our [presentation] decks, because it’s true, but we never thought about it as a big plus or a game-changer.”
But, voila!: Costco quickly signed a deal to get Hint Waters and began selling the line nationwide in early June. Already retailed in major chains including Target, and this year beginning to appear on the shelves of other big retailers including Walmart and Aldi, Hint Water added Costco as an unexpected bonus that fell to the company entirely because of its domestic-sourcing strategy.
Since founding the company 15 years ago, Goldin has relentlessly built Hint Water into a brand that outsiders estimate with revenues of about $150 million, helping to build the ever-expanding bottled-water category in the United States. At the same time, Hint Water has grown robustly enough that it has been able to remain independent even though voracious beverage titans are continually looking for smaller brands to acquire.
Goldin’s strategy has been unusual for a number of reasons, and her approach to manufacturing is one of them. Typically, beverage startups will contract out concoction and bottling of their products to contract manufacturers as entrepreneurs test their concepts and try to get traction in the marketplace. Once assured of success, often they’ll build and own plants themselves.
But instead, Goldin has stuck with her network of contract processors, assuring them of big and growing chunks of business as they expand for her purposes. Both Hint Water and its contractors also must put up with close attention by regulators such as the Food & Drug Administration and state officials, given the plant ‘essences’ —food products — are going into Hint Waters. Another factor: Hint Water is a premium-priced product, at $1 or more a bottle.
Because of these factors and others, Goldin determined from the start that Hint Water would forego the possibility for cheaper inputs from China and elsewhere. Another factor was the danger of disrupting the success that Hint Water was piling on year after year.
“We’ve had discussion over the years whether we could save a few bucks by sourcing differently,” she said. “But we’ve been in hyper-growth mode over the last few years, and we felt it would be a disruption to go [to China], meet the people, cope with the language barriers – we just thought it might not be worth it. At the board level we would have this conversation.
“You have to have great people on the ground making sure the quality is right and other things. Sometimes we thought, ‘Maybe next year.’ But we always came back to, even if it’s a little more expensive to source everything in the United States, it’s just easier to maintain that.”
For Goldin, sustainable sourcing was another important factor. For one thing, she has spread distribution of Hint Water across the United States, from the eight plants, in part to cut down on greenhouse-gas emissions; Hint Water also has put together a sophisticated “back haul” system to use its trucking capacity for other companies’ needs to eliminate otherwise-empty trips back to the factory.
More broadly, concerns “from a carbon-footprint standpoint” also have kept Hint Water from expanding abroad. “If we can producer as locally as possible, that’s a lot better,” Goldin said. “That’s critical to whether we go into another country. And we might not do it until 2021.”