Memo: How Sanzo Won Marvel

A generation of young consumers deserve the credit for its role in how brands think about partnerships and messaging.

For today’s retailers, authentic engagement and depth can matter as much as reach when it comes to partnerships. This has become common practice in the world of modern brands and niche media outlets. But something bigger is taking shape. If there ever was a “trickle up” effect, this essay will serve as an example. One of the largest and most powerful media conglomerates in the world chose sincerity over cash, reach, and distribution.

Long gone are the days of no-brainer deals with Pepsi, Coca-Cola, and Nike. Today’s public figures are setting aside their reliance on major brands in favor of partnerships that are more true to themselves. Authenticity is at the center of this shift, and it’s opening wide doors for nascent brands to compete against their elder statesmen. In a recent essay on OLIPOP’s partnership with Olympian Gabrielle Thomas, 2PM highlighted this changing sentiment around brand partnership:

In speaking with the agency for this report, they emphasized how important Thomas’s ideals were to her product sponsorship selections. The partnership between OLIPOP and Thomas was a natural fit as it is reported that she was already an organic fan of the brand. [1]

Now, that’s trickling up to film studios, sports leagues, streaming networks, and music festivals, which all seem to be following the same wave of authenticity. Over the previous year, digitally native retailers have done a remarkable job of positioning themselves for these opportunities.

In the past year, Rowing Blazers partnered with dormant English retailer Warm & Wonderful to produce the Princess Diana jumpers as Netflix’s The Crown wowed viewers with an inspired depiction of the late humanitarian. Kim Kardashian’s influence and business acumen helped land Skims as the official underwear partner to the U.S. Olympic Commission’s athletes. Madhappy partnered with Lebron James’s remake of Space Jam, producing hoodies and crew neck sweaters that are now sold on the secondary market for $450 or more. And hot sauce CPG brand Truff’s partnership with one Taco Bell location in Southern California has permeated social media conversations well beyond the border.

While each of these are notable, none accomplished what Sanzo has so early in the company’s lifespan. A recent report by BEVNET began: “Though it may not be a household name, when it comes to marketing partnerships Sanzo is punching above its weight.” The praise was deserved. Founded in 2019 by Sandro Roco, a Queens-born Filipino American, the brand is one of the latest entrants into the white-hot “fizzy water” market. The cap table includes the likes of Away’s Jen Rubio, Adobe’s Scott Belsky, and as of recently Simu Liu, the star of Marvel’s Shang-Chi and The Legend of The Ten Rings. More on that last investor in a moment.

The Sanzo brand is emerging during a dynamic period for Asian Americans and Pacific Islanders. Its two years in existence have been wrought with senseless and indiscriminate violence towards Americans of Asian descent. The angry rhetoric and exclusion birthed such hashtags as #StopAsianHate, a tag that you will find spread by a handful of the most powerful investors and businesspeople including Jeremy Liew, Partner at Lightspeed Venture Partners.

The former executive at Bombfell and J.P. Morgan trader, Sandro Roco took a grassroots and hard-nosed approach to building Sanzo. In the beginning, you would find him hauling cases down the street, hoping to sample his way to omnichannel adoption by today’s most important retailers. It worked. While Asian Americans were being indiscriminately targeted in some of America’s biggest cities, Roco was positive and hopeful in his persistence to break through in an intensifying market. That often meant him doing the work at the street level with a dolly and cases of product. Take a moment to empathize with Roco’s cognitive load as scores of citizen-captured videos flooded social media by the day. He really wanted Sanzo to breakthrough the noise. And he found a way to do just that.

At the same time that indiscriminate violence was on the rise, the ‘easternizing’ of American culture accelerated. More commercial opportunities, once afforded almost exclusively to guys named Brad, were now afforded to actors, actresses, musicians, artists, and entrepreneurs of AAPI descent. This Roco quote from a recent Forbes article announcing Sanzo’s latest funding does a solid job of summarizing Sanzo’s appeal and the wave that may help it compete against larger, well-funded, and better equipped CPG conglomerates.

Back in mid-2018, we started to see what I describe as ‘easternizing’ of American culture with Crazy Rich Asians becoming the number-one film in the box office and K-pop getting a fever pitch. [2]

One of the national efforts to combat implicit and explicit bias towards AAPI citizens was the launch of Gold House. Founded in 2019, it was built to help Asian founders “overcome societal stereotypes” while elevating their work beyond what was customarily deemed their target market. Sandro credits Gold House for helping the Sanzo brand forge a relationship with Walt Disney Corporation, one that would later manifest into the Marvel Studios project. In a May 2021 NBC News report on the organization:

The nonprofit Gold House is best known for elevating films like Parasite and Crazy Rich Asians into epic blockbusters. But true representation of Asians isn’t just necessary in Hollywood; the organization is determined to see it in every industry, in every C-suite. [3]

The next big opportunity for Gold House was March 2021’s Raya and The Last Dragon, an animated feature by Disney Studios featuring Kelly Marie Tran, Sandra Oh, Gemma Chan, Daniel Dae Kim, and Awkwafina. The film grossed $122.7 million in the box office while simultaneously released on Disney+. Roco’s Sanzo brand was used as cross-promotion for the Disney picture and according to Roco, it was a profitable venture. He noted Disney’s positive role in partnering with an “unknown” for the project. Roco told 2PM:

It’s impossible to do anything in eight weeks with Disney. But they recognized that we are not Coca-Cola or General Mills. Together, we made it work.

He applauded his team’s hard work and diligence to make the latest partnership come alive. After the completion of the Raya partnership, Roco “shot his shot” and pitched a Shang-Chi collaboration. The green light came almost immediately. In the Sanzo founder’s conversation with BEVNET’s Martin Caballero, he added:

We’ve seen firsthand that both the Marvel and the Disney executive team have taken a more intentional approach to partner with brands that more authentically represent the messages of the films they are putting out there. They noted to us that the strength of our brand and the community that we bring in gives a certain level of authenticity.

In August, that green light became green money. Shang-Chi is one of Marvel Studios’ most highly-anticipated films as of late. Analysts predict that it has the potential to outperform Black Widow, despite the latter film’s star power of actress Scarlett Johansson in the starring role. Shang-Chi features rising stars Simu Liu, Awkwafina, Tony Leung Chiu-wai, and Fala Chen. The well-reviewed film pairs a relevant theme with a new slate of heroes and action formats that are new to the Marvel Cinematic Universe. The commentary around the film is not entirely new.

While smart merchandising partnerships like Sanzo’s deal are a highlight for the film, some argue that Marvel is not properly promoting the film due to the age-old idea that it may not resonate with a larger audience – a euphemism for white audiences. Though Disney was proven wrong by the global reception ($1.3 billion grossed) to Black Panther, this burden remains for AAPI actors to retread the same territory. In my many conversations with Sandro Roco, he cites the hidden market opportunity for products like Sanzo. He notes that Asians and their taste preferences represent over 60% of the world’s population. What Disney and Marvel Studios view as niche isn’t at all. In this way, Sanzo and Shang-Chi are running in parallel.

When the founder and his film-customized cans showed up for the red carpet debut of the film, he was welcomed with open arms by Shang-Chi‘s slate of stars. Gold House was right: there seemed to be an authentic appreciation for Sanzo’s story of resilience and comeuppance (the brand is now in Central Market, Whole Foods, Erewhon, and other retailers). There waiting for Sandro on the red carpet was Simu Liu, who became an investor in the brand after the deal was negotiated in April of 2021. The stuntman and movie star recently dominated social media conversations with Marvel’s release of one of the film’s fight scenes, an homage to Jackie Chan’s inventive use of his surroundings as weaponry.

Over just two years, Sandro Roco and his team have worked tirelessly to gain approval from an industry that is cold to outsiders. Now that the founder has momentum, a few key partnerships, and a superhero on his team, his fight to the top may be a little easier.

Sanzo has reported a sixfold increase in daily DTC sales and conversations that will surely lead to greater omnichannel opportunities. But before Sanzo won over merchandisers and national distribution, the brand won over Disney and Marvel. Other digitally-native retailers should take note of this momentous year in extraordinary partnerships.

By Web Smith | Editor: Hilary Milnes | Art by Alex Remy  

Disclosure: Sanzo and Rowing Blazers are 2PM investments. Sadly, Madhappy isn’t. 

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Memo: On Coffee and Enlightenment

When author David Perell published the brilliant short essay “Beer Mode, Coffee Mode“, I began to research the history of the dynamic between the two beverages. Perell’s work was a figurative look at the creative impulses around fun and focus, not the consumption of the products themselves. Once upon a time, caffeine overtook alcohol as the drink of choice. This is a memo on coffee’s first period of great European influence. The adoption of coffee culture and non-alcoholic beer consumption could mean something similar for today.

What happens when alcohol consumption falls and coffee consumption increases during periods of instability and new forms of community? If history would have it, we’re in for a period of lasting social, economic, and scientific innovation. There is a passage in Steven Johnson’s The Invention of Air that is relevant to this thought. The book is about the protégé of Benjamin Franklin, who had a notable thought on the European 17th century.

The impact of the introduction of coffee into Europe during the 17th century was particularly noticeable since the most common beverages of the time, even at breakfast, were weak ‘small beer’ and wine. Those who drank coffee instead of alcohol began the day alert and stimulated, rather than relaxed and mildly inebriated, and the quality and quantity of their work improved. Western Europe began to emerge from an alcoholic haze that had lasted for centuries.

The innovations that come of today’s Web3 era of the internet may influence decades of human existence. History doesn’t repeat but it rhymes, and two consumer trends may be to thank. We are consuming more coffee and we are drinking less alcohol. We are more social and mindful. We’ve seen this relationship between beverages once before, during The Age of Enlightenment. PhD philosopher and professor Stephen Hicks once wrote:

As a contributing factor, coffee (and tea) certainly gets credit on physiological grounds. Also contributing was the development of European coffee house culture, the coffee houses bringing businessmen, artists, and scientists together for drinking and socializing. The great Lloyd’s of London company, for instance, had its beginning in Edward Lloyd’s Coffee House in London, which dates from (possibly) 1685 or (more likely) 1688, the year of England’s Glorious Revolution and John Locke’s return from exile in Holland. [1]

We are sitting at the confluence of two rivers: mistrust in our institutions and the emphasis on mindfulness. That intersection is strikingly similar to the “long 18th century”, a period of remarkable change from 1685-1815.

The Enlightenment produced numerous books, essays, inventions, scientific discoveries, laws, wars and revolutions. The American and French Revolutions were directly inspired by Enlightenment ideals and respectively marked the peak of its influence and the beginning of its decline. [2]

Europe’s long century was of the most consequential to our contemporary economies and cultures. Then, it was the French Revolution of 1789, Adam Smith’s liberal economic theories between 1776 and 1789, the adoption of the printing press, new forms of travel, and the proliferation of member clubs, salons, and the European coffee house. There are similarities between the spirits of then and now. Both Europe then and America today faced massive cultural shifts against the backdrop of what we now politely call “consumer bifurcation”: the rich getting richer and the poor are sinking lower into poverty.

Web Smith (📜, 📜) on Twitter: “Coffee is an underrated bedrock of modern civilization. Without the European coffee house, there would have been no Age of Enlightenment. / Twitter”

Coffee is an underrated bedrock of modern civilization. Without the European coffee house, there would have been no Age of Enlightenment.

Many of today’s cultural shifts are emblematic of the upper echelon of society risking investments across a spectrum of assets. Consider the move from fiat currencies to crypto protocols, from named online users to the pseudonymous economy, from physical artwork to the non-fungible, from centralized narratives to decentralized storytelling, and from government galactic to civilian intergalactic. We are in the midst of another Age of Enlightenment thanks to a mass migration from physical to digital agglomeration.

Unlike 1685-1815, the European cafe is no longer the venue for the exchange of ideas.

Back then, the apex of the French monarchy crashed thanks to a bifurcation of wealth elevating an aristocratic class while the neglected suffered from impoverished conditions. Meanwhile, the European cafe became the resort for “those with wit,” removing mostly men from the patterns of drunkenness and debauchery. A generation of perpetual drunks shifted from alcoholism to the sobering and mind-altering benefits of caffeine. This trend away from one and towards the other influenced many great social, academic, and political advancements.

The European cafe encouraged information synthesis in ways that universities once exclusively held monopoly over. They promoted conversation, debate, and authorship. The shift from alcohol to coffee was the catalyst.

Today’s subtle cultural shift: beer down, coffee up

Coffee has never been more popular in the United States. There are a record high 15,000 Starbucks franchises in the United States. There are over 37,100 coffee houses in total, generating some $22 billion in 2020 retail value. By that same year, over 40% of US consumers had a single-cup coffee system in the house, up from close to 10% in 2012. .

In a period between February 2019 and February 2020, $1.25 billion in Starbucks frappuccinos were sold in the United States. According to Mordor Intelligence, the American coffee industry can expect a CAGR of 4.8% through 2025. Of that growth, nearly 70% of consumers prefer in-home coffee. They note another key insight:

A gradual shift has been observed from soft drinks to coffee drinks among consumers in the region in recent years.

Of those in-home coffee systems, Cometeer near the forefront. Former computer scientist Matt Roberts co-founded Cometeer in 2015 along with Doug Hoon and Karl Winkler, who each possess extensive backgrounds in engineering and product development. The brand went on to raise an initial $50 million and today, backed by a strong direct-to-consumer and subscription strategy, the brand is reported to be on track for high eight figures in annual revenue. In 2019, my alma mater Gear Patrol wrote about the brand: 

Not much is known about Cometeer Coffee Capsules, but what we do know is encouraging. Its site promises specialty-grade coffee frozen “in peak state” and ready to brew with or without K-cups (plus, it’s recyclable). The collection of high-profile roasters are already on board may be even more telling — co-signatures from craft coffee roasters like George Howell, Bird Rock, Equator and CounterCulture don’t come easy. [3]

Just a few years later and it is showing up in New Year’s Resolution product rundowns on Snaxshot by Andrea Hernandez. Herproduct site is of the foremost authorities on interesting, qualitative consumer developments. But equally as interesting is this figure on non-alcoholic beer import volume:

According to IWSR Drinks’ Market Analysis, a data and intelligence company that tracks worldwide alcohol trends, non-alcoholic drink products increased 22.6% in 2020 and is expected to grow over the next four years. IWSR anticipates a CAGR of 9.7% in this market through 2024. The trend towards decreasing alcohol consumption is emerging in predictable and unpredictable places. First the predictable by the IWSR:

Beer continued annual volume declines with a -2.8% loss in the US in 2020, as volume gains in imported beer weren’t enough to sustain losses in domestic beer volume. Nonetheless, imported beer grew market share in 2020. No- and low-alcohol beer proved a bright spot for the category, however, and the category is expected to continue to grow.

And the less predictable, a recent report by The Guardian notes an NA movement in high places:

The Virgin Mary, which started serving alcohol-free drinks in Dublin a couple of years ago, is expanding. [4]

And while Cometeer is making headlines in the in-home coffee market, Athletic Brewing has emerged as the DTC media darling for the non-alcoholic movement. A recent CNBC feature on founder and CEO Bill Shufelt was amplified by investor Darren Rovell, who aptly saw the DTC beer brand as a worthwhile investment before this trend was clear to many in the consumer investment industry.

Nearly four years ago, I chose to give up alcohol altogether. My reasoning was personal but the gist of it was that I wanted to maximize every day that I had left. Gone was the mental fog and some of the anxiety commonly found in entrepreneurs. Meetings were more productive, ideas were more potent, and I grew more confident in my ability to synthesize unrelated ideas. These attributes are the foundation for what made the Age of Enlightenment collectively great, it took unfulfilled drunkards and turned them into alert and witty thinkers. The best of those thinkers changed the world.

Consumer trends can be leading indicators. And while there is no guarantee that this trend away from alcohol and towards coffee will continue, there is precedent for what happens if it continues. And the early signs point to that outcome. We’ve experienced an extraordinary period of innovation over the past several years. The best and brightest are feverishly reading, writing, executing, and synthesizing the work of others just to keep pace with the many innovations across economics, health sciences, communication, and art. You can never call your own time one of enlightenment or reason. But something about today seems different than the years that preceded it. Maybe what we drink has a role in all of it.

By Web Smith | Edited by Hilary Milnes | Art by Alex Remy and Christina Williams