Hoplark filed for bankruptcy after raising more than $25m
The hop-water maker rode a booming non-alcoholic category. Distribution costs, tight shelf space and weak retail demand arrived anyway.
Hoplark, which makes hop-flavoured sparkling water, has filed for bankruptcy. Inc. reports the company had raised more than $25m.
Its revenue fell before the filing, according to that account. The causes named are distribution costs, limited shelf space and soft demand at retail.
None of those are unusual problems. They are the ordinary economics of selling a canned drink through other people's shops.
A drinks brand pays to get its cans into a warehouse, then pays again to get them onto a shelf, then pays in discounts to keep them moving once they are there. The category growing does not change that arithmetic.
It arguably makes it worse. A booming shelf attracts more brands competing for the same few facings, and the retailer sets the terms.
Venture money can cover the gap for a while. Hoplark raised more than $25m, and the funding did not outlast the cost of distribution.
The broader lesson for founders selling a physical product is about where the margin actually sits. If a distributor and a retailer take their cut before you do, volume growth can arrive without cash.
The size of the revenue decline has not been disclosed, nor the form the bankruptcy filing takes or what happens to the brand next.
More: Hoplark