It seems like every big brand has an NFT these days—Alo Yoga, Prada, Coca-Cola, and even Lamborghini. But name-brand recognition isn’t a requisite for a potentially valuable foray into the Wild West of Web3.
Despite the fact that NFT ownership isn’t particularly widespread (only around 2% of Americans have bought NFTs), minting an NFT collection may prove a smart way for new brands to get off the ground, and to be prepared for widespread adoption in the future.
Or at least, that’s the bet Leisure Project, which makes hydration beverages that target younger generations that may care more about being creative and mental health rather than athletes and performance, is making.
Steve Michaelsen, who co-founded Leisure with his brother, said the NFT collection they launched allowed them to build a foundational community nearly two months before their first cans hit the market.
“To find your first customers is very hard,” Michaelsen told Retail Brew. “We actually found our first customers by launching an NFT.”
Working backward
Adoption rates aren’t quite high enough for NFTs to be ubiquitous in the retail world, but brands can’t afford not to explore their options in the space if they don’t want to be left behind, said Marcel Hollerbach, chief innovation officer at Productsup.
“These cycles of innovation will get shorter and shorter, and the speed at which consumers adopt new technologies is getting shorter,” Hollerbach told Retail Brew.
Eventually though, adoption will skyrocket, he said. “And the brands and retailers who have put their foot in that space before, and have built that muscle and know how to use it, they will be the ones to massively profit from it.”
Dynamic duo: Leisure Project’s two-person team launched their NFT collection in March 2021, and today has 400 token holders who receive product discounts, early access to new flavors and merchandise, and in the future will be able to vote on product lines and flavors.
- The brand’s Leisure Creatures NFTs—colorful sneaker-wearing, hat-adorned graphic representations of Leisure beverage cans—initially sold for .08 Ethereum.
- Today they’re available on OpenSea, and the average price is slightly higher, at .09 Ethereum, or $121.
- Michaelsen said Leisure’s NFT holders tend to be “NFT-natives” who have an interest in CPG brands.
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It takes a (digital) village: While Leisure’s NFT drop may not fuel the company on its own (Michaelsen said they’re also actively fundraising), it helped make the project less of a “cash burn.”
“I feel like this is Kickstarter 2.0 in a way, where you not only help founders that have visions of a brand, but you also get to have a longer term relationship with them,” Michaelsen said.
Hollerbach, who is also an investor, is on board with the pre-product NFT strategy. “I think the NFT thing actually has an even bigger benefit than the classic crowdfunding campaign,” he said. “They keep delivering value, they keep delivering functionality, connections and so on, and that keeps the community alive.”
- There’s also continuing monetary value for brands, because with every NFT sale on the aftermarket, they’ll earn a commission, which can provide a steady cash flow, he said.
While the NFT launch may have helped Leisure establish a loyal fan base, the Michaelsens are clear that their strategy to “win” the beverage market is retail, starting in Southern California but eventually expanding to “every store that you would ever want to buy a hydration beverage.”
“If you never knew what an NFT was, you could still buy this and understand what the product is,” Michaelsen said. “People in Web3 are stoked, because they’re like, ‘Woah, an NFT got into Erewhon?’” But the novelty of NFTs isn’t enough to lift Leisure to widespread name recognition. “If we want to bring people into Web3, it can’t be something that only people [already] in Web3 think is cool.” —MA