The sparkling water market was estimated to be in excess of $33B globally in 2021 according to Grand View Research. As consumers continue to become more health-conscious and shy away from carbonated soft drinks that contain sugars, preservatives, sweeteners, and carbohydrates, the industry is poised to grow in excess of 12% per year. Asian Americans represent the fastest-growing consumer segment in the US and represent $1.2T in buying power. Sitting at the intersection of these two trends is Sanzo, a canned sparkling water brand offering Asian-inspired flavors. Available direct online, through grocery marketplaces, and in thousands of physical locations including Whole Foods, Panda Express, and Target, the brand offers dynamic flavors that cater to specific regions of Asia like Lychee (SE Asia), Alphonso Mango (India). Yuzu Ginger (Japan), and Calamansi Lime (Philippines), appealing to often-overlooked palates when it comes to consumer goods. Despite the pandemic, lockdowns, and uncertainty, the company grew 5x both in 2020 and 2021.
AlleyWatch caught up with Sanzo CEO and Founder Sandro Roco to learn more about his experience launching and scaling the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $11.3M, and much, much more…
Who were your investors and how much did you raise?
We closed a $10M Series A financing round, led by CircleUp Growth Partners and with participation from Convivialite Ventures, Semillero Partners, Gold House Ventures, Kaya Ventures, and Francisco Crespo, the former senior strategic advisor to the CEO and Chairman of the Board as well as former 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. Another previous investor includes Simu Liu, the first Asian lead in a Marvel film.
Tell us about the product or service that Sanzo offers.
Sanzo is the first Asian-inspired sparkling water born to deliver beverages that bridge the gap between beloved Asian flavors that represent over 60% of the world’s population and clean, modern labels. Each can of Sanzo is made with real fruit and zero added sugar, artificial, or natural flavors—a complex yet refreshing antidote to sugary and preservative-heavy labels of legacy Asian and American brands. Currently offering Calamansi, Lychee, Mango, and Yuzu Ginger sparkling water flavors, Sanzo represents an invitation to both traditional and pop Asian culture—a true extension of the ubiquitous influence the region continues to have on a global scale.
What inspired the start of Sanzo?
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. 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. I also see it as an ongoing opportunity to bridge the cultural gap between the East and the West through authentic flavors (Alphonso mango native to India, lychee native to Southeast Asia, calamansi native to The Philippines, and yuzu native to Japan).
How is Sanzo different?
I think customers are more ready than ever to buy from brands that represent culture in a real and authentic way. 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.
What market does Sanzo target and how big is it?
We see Sanzo as making a significant dent in the $10+ billion sparkling water category and broader $30+ billion carbonated soft drink market. Even at its current size, the sparkling water category continues to be the fastest-growing beverage category, taking share directly away from full-calorie sodas. Additionally, as an Asian-American-owned brand, we see a major opportunity by drawing our inspiration from flavors representing an entire hemisphere, comprising 60% of the world’s population.
What’s your business model?
We primarily sell our beverages at retail through a network of local, regional, and national beverage distributors. Over the next few months, you’ll see Sanzo roll out in all Whole Foods Markets and Sprouts Farmers Markets nationally, 2,000+ Panda Express locations nationwide, and 200 Target locations in the Northeast, Northern, and Southern California. We also sell directly to the customer via drinksanzo.com, Amazon and through a variety of e-marketplaces, such as GoPuff, Thrive Market, and Instacart.
What are your post-COVID office plans??
Our intention is to bring team members back into the office M/T/Thu, with Wed/Fri being optional. That said, we are monitoring the current COVID-19 situation very carefully and do prioritize the health and safety of our team members above all else.
What was the funding process like?
Every fundraising process is different and, even for myself, this raise looked much different from my first one. My first fundraise was mostly a rolling “party round” featuring an agglomeration of smaller angel investments and syndicates. While exhausting, it was such a fantastic way to build a diverse base of rabid advocates and folks who could in their own ways, big and small, provide a lot of value for an early-stage brand.
That said, going into the Series A, I learned how much more structured and intentional the round needed to be in order to be successful. Securing our lead investor was the most important part of Phase I of the round, and once we got that, the rest of the round filled up pretty quickly and we even got oversubscribed. So at that point, it was figuring out who we wanted along for the journey and what combination of investors would provide the most balanced value-add for the brand.
What are the biggest challenges that you faced while raising capital?
Despite the rise and success of Asian-American-led creative and entrepreneurial works, most investors are still in the super early stages of learning about how brands like Sanzo bridge cultures and create real market value in multi-billion-dollar categories such as sparkling water. Less coverage about our successes leads to lower awareness, which in turn leads to a higher need to educate during the investment process, which sometimes isn’t the ideal venue. That said, being in the ring, I feel fortunate to actively see the tide turning and am encouraged by stakeholders across the entire ecosystem.
What factors about your business led your investors to write the check?
This growing and strategic group of investors demonstrates our ongoing commitment to AAPI representation at all levels of the business and also supports our core mission to make a significant dent in the $10+ billion sparkling water category with authentic, beloved Asian flavors.
What are the milestones you plan to achieve in the next six months?
In addition to significant retail expansion, we’re actually gearing up to announce a collaboration with PIXAR in March, our third movie collaboration within a year that puts Asian characters center stage (last year we collaborated with Marvel Studios for their record-breaking debut of “Shang-Chi and The Legend of The Ten Rings” and with Disney for “Raya and The Last Dragon”). The fact that we get to be part of yet another large milestone for the AAPI community is really surreal for our entire team.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
The biggest thing I’d advise folks to do is to continue stretching their cash as much as they can while looking for opportunistic ways to demonstrate growth or social proof. There is also a growing ecosystem of small business loan providers that founders can access. Cautionary note: given the riskiness of the loan from the lender’s side, the interest rates can tend to be quite high, so I wouldn’t advise this as a long-term solution. But depending on your business model, these small business loans can be a great bridge as founders pursue achieving product-market fit and can then hopefully have a more successful fundraise.
The biggest thing I’d advise folks to do is to continue stretching their cash as much as they can while looking for opportunistic ways to demonstrate growth or social proof. There is also a growing ecosystem of small business loan providers that founders can access. Cautionary note: given the riskiness of the loan from the lender’s side, the interest rates can tend to be quite high, so I wouldn’t advise this as a long-term solution. But depending on your business model, these small business loans can be a great bridge as founders pursue achieving product-market fit and can then hopefully have a more successful fundraise.
It’s also so important to stay in touch with investors. I can’t tell you how many folks passed on us the first and even second time but are now investors in the brand. Investors are people, their investment theses and processes evolve, and I’d say in >95% of scenarios, a ‘no’ is mostly a ‘not yet.’
Where do you see the company going now over the near term?
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. We are also actively looking to add to our existing manufacturing efforts, invest in new product development, and explore other formats that make sense for the brand.
What’s your favorite outdoor dining restaurant in NYC?
Sagaponack in the Flatiron District is just delightful.
