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Case Study: Testing the Waters

Illustration by Christina Spano
Endurance training was nothing new to Lauren Picasso (MBA 2014), who’d raced through her younger years as a cross-country runner and swimmer. In 2017, when she was director of marketing at Jet.com and looking for a physical challenge, Picasso signed up for an Olympic triathlon in Miami and immediately got to work, with a mix of weekday workouts and longer weekend sessions. But training through a New York City winter can go only so far in preparing a person for exertion in the Miami heat. “I really struggled,” Picasso says. In spite of severe leg cramps, she finished the race. And she spent the next day completely out of commission.
Like many endurance athletes, Picasso had started drinking Pedialyte to speed up the recovery process after her toughest workouts, and the electrolytes definitely helped. But as someone so focused on fitness and peak performance, Picasso felt apprehensive about the added sugars and artificial ingredients in Pedialyte or other options like Gatorade, with sugar content close to that of a soda. She looked into the science of hydration and discovered that she could mix up her own recipe with ingredients from her kitchen: coconut water and pink Himalayan salt, with lemon juice and stevia for flavor. Seeing a big opportunity on her hands—an effective, functional product with cleaner ingredients than anything on the market—Picasso left her job at Jet.com to focus on the startup; she launched Cure Hydration in 2019.
The company offers a line of eight powdered drink mixes that are formulated according to the World Health Organization’s oral rehydration solution—a specific ratio of glucose, sodium, and potassium that can replenish the body more efficiently than water. Cure uses plant-based ingredients and no added sugars. Rather than focus solely on athletes, Cure appeals to consumers as an everyday hydration product as well as for use cases that can lead to electrolyte imbalance, including pregnancy, illness, certain medical conditions, or even as a hangover remedy. Cure is sold on their website (CureHydration.com), on Amazon, and by more than 13,000 retailers, from Walgreens to Wegmans. The VC-backed company has nine full-time employees and has more than doubled every year while also improving margins, Picasso says.
Having established itself as a growth leader in the category, Cure Hydration is exploring options for innovation in an expansive but increasingly competitive market: Cure’s biggest competitor, Liquid I.V., was acquired by Unilever in 2020 and is reportedly closing in on $1 billion in net sales. The most straightforward route to growth is to simply stay the course, Picasso says, and boost brand awareness and its existing distribution channels. But not having a portfolio of innovative products in the pipeline feels risky to Picasso. She sees two other good options for innovation:
1. Focus on the same customer segment but meet more of their needs. Cure has a pretty clear picture of its demographic: 70 percent of its customers are women. They are generally physically active, average about 42 years in age, and most of them are parents. In interviews, Cure found that its customers also tend to take other functional nutritional supplements. “We looked at the most common and wondered if we could meet this need with our own formulation,” Picasso says. Examples could include a powdered probiotic or magnesium drink. “The challenge with multi-categories is you lose the marketing efficiencies from just talking about hydration. Once you have to educate across these multiple functional categories, each category has to be big enough to warrant the cost of that education,” she explains.
2. Alternatively, Cure could expand its customer demographic by entering new subcategories—leaving the comfort (and cost-effectiveness) of a powdered product, for example, to launch a ready-to-drink (RTD) option to compete with Gatorade and BodyArmor. “We know that the market for RTD is at least 10 times bigger, but the challenge is that beverages won’t work well online due to high shipping costs and currently e-commerce makes up over 50 percent of our revenue,” Picasso acknowledges. Once you build that distribution network, though, it’s a much bigger, addressable market.
Should the company continue to focus on hydration or expand into other categories?
My advice to Lauren would be to stay the course. The first option (focusing on the same customer segment while adding a powdered probiotic and/or magnesium drink to the product line) is compatible with that strategy.
Achieving sales and distribution through major retailers and ecommerce with only nine employees says something positive about the current product line and its positioning. And Liquid I.V.’s nearly $1 billion in sales says that Cure is mining a big TAM (total addressable market) and has room to grow there. Cure can focus marketing messages on hydration while adding some adjacency products. Many firms do that without brand dilution or loss of marketing efficiency—especially if current channels will carry the additional SKUs.
Conversely, entering new drink categories seems premature and a true loss of focus. Brand building in the ready-to-drink category will be expensive and take time (a key consideration for a VC-backed venture). It’s one thing to market a differentiated powdered drink mix; it’s quite another to compete with the ad spend, sales forces, and promotional programs of Gatorade and other big beverage companies in a larger but already crowded category.
This entrepreneur knows her customer base, other use cases relevant to that base, and how to sell hydration products online and through retail stores. In an omnichannel buying world, those are significant assets that Lauren should continue to leverage and develop more fully before entering different categories.
—Frank Cespedes teaches at Harvard Business School and is the author of Aligning Strategy and Sales and Sales Management That Works, both published by Harvard Business Review Press.
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