The rise of wellness beverages on store shelves indicates the changing consumer attitudes towards health and wellness. This surge is attributed to the consumers' growing interest in beverages that support their health and wellness goals, such as improving gut health, boosting immunity, and enhancing overall well-being.
The functional beverages market, which includes products like kombucha, ready-to-drink teas, super-fruit juices, and others known for their health benefits, witnessed a remarkable growth from $131.47 billion in 2022 to an anticipated $224.99 billion by 2027.
At the forefront of this wellness trend, MUD\WTR has emerged as a trailblazer, challenging the conventional caffeine routine with its innovative coffee alternative, adaptogenic mushrooms. This unique blend invites consumers to reimagine their morning ritual, offering a path to balance and focus without the coffee jitters.
According to SPINS, the category of Tea & Coffee with functional mushrooms and adaptogens is growing 17X faster than just the Tea & Coffee category alone. MUD\WTR is outperforming the category’s average velocities in volume and dollars by more than 75 percent.
We caught up with Shane Heath, the visionary CEO and founder of MUD\WTR, for an enlightening conversation about the brand's inception, its journey from an e-commerce powerhouse to breaking ground in retail, and the exciting unveiling of its first physical iteration, MUD\WTR :gather, in Santa Monica.
This hybrid space—part mushroom cafe, part mindfulness studio—represents a tangible manifestation of the brand's ethos. With a rapid ascent to success, including a recent rollout on all Target shelves and on Target.com, their best sellers :rise Cacao and :rise Matcha.
With ambitious plans for future expansion, Heath shares insights into how MUD\WTR movement towards intentional living and holistic well-being. Join us as we delve into the story behind one of the most captivating players in the beverage sector and discover what lies ahead for this pioneering brand.
What inspired you to take MUD\WTR from an online brand to opening a physical store, and how does the new :gather space embody your company's core values?
Backstory
Growing up in Santa Cruz, CA, my mother worked for Monterey Mushrooms, one of the biggest mushroom growers in North America. I learned early on what it means to grow and incorporate mushrooms into your lifestyle and cooking. It wasn’t until later in life that I was inspired to start MUD\WTR while working a 9-5 job. The crazy thing is that I never actually intended for it to be a business. What started out as something very experimental that I benefited from personally to get me out of a dark place, grew into a company that I am humbled to say has positively impacted millions of lives today.
After graduating from San Diego State with a Bachelor’s in Graphic Design, I got into the professional corporate world working as a UI/UX designer in Silicon Valley. Stressful days and long nights drove me to increasingly reach for many cups of coffee just to get by. Like any stimulant, the more you consume, the more dependent you are on the thing.
That lifestyle caught up with me. The anxiety, jitters, and restless nights began to negatively impact my productivity at work, and took a huge toll on my mental and physical wellbeing. I knew when 90% of the population is dependent on coffee, there had to be a healthier alternative. I started making MUD\WTR from my apartment kitchen while working my full-time job and would walk to the post office during my lunch breaks just to ship/fulfill orders. My side hustle blew up quickly – and by month four, I was doing $130,000 in revenue and by month six, I secured my first investor.
While we started as an online company, brick-and-mortar has been in our DNA since day one. MUD\WTR exists to create healthy minds through healthy habits. And when it comes to healthy habits, community and connection, which require in-person presence to be effective, are as important as any. That is why we opened MUD\WTR :gather in December: to bring together people in real life and offer a physical space where they can practice mindfulness. Whether that means enjoying one of our tasty mushroom-based beverages, indulging in a cold plunge, or participating in a breath work session — we’re here to support your healthy routines.
Considering the increasing trend of e-commerce brands opening physical locations, how do you foresee the interplay between your online presence and the :gather store?
Consumers can purchase all of our products on our website (mudwtr.com) and through retailers, such as Target, with many more to come. The cafe is a space where you can not only taste our products and try different flavors/products before you buy, but you can also touch, hear and feel what our brand and community are all about. We host classes, offer cold plunge, breathwork sessions, and co-working space.
I foresee :gather becoming a blueprint for how consumers can try the product before they bring it home with them. What we do in our cafe can be translated to our retail and cafe partners across the U.S.
Given your personal journey away from caffeine addiction towards balance, can you tell us more about what bringing MUD\WTR's product offerings to physical retailers means to you?
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Launching into physical retailers, our own and especially more mass retailers like Target, validate our hypothesis around caffeine and consumer behavior.
I think caffeine is the new sugar.
Not long ago, if someone said a 12 oz soda had 44g of sugar in it, many didn’t know that amounted to much. Similarly today, if you point out that a 12 oz Starbucks Pike Place has 235mg of caffeine, people don’t know if that’s a lot or a little.
People are becoming more aware of how what they put into their body impacts their mental and physical health. As consumers become aware of the varied effects driven by the dose of the compounds they consume, they become more conscious of their relationship to the consumable products that contain it.
We ultimately want to meet consumers where they are, wherever they shop. Whether that’s in their local health food store, cafes or Target, we want to provide healthy alternatives for them in as many ways as possible. The response so far has been motivating.
In what ways do you think the personalized experiences offered at :gather will contribute to creating healthy minds and habits among your customers?
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Coffee shops are a dime a dozen in LA.
The original coffee shop became the 3rd location. The place that isn’t the office and not home either. It’s a neutral ground to be in community. A really amazing concept.
But over time these places have gotten smaller and more transaction-oriented. Today, when you walk into a cafe people are hunched over their laptops, headphones in, not engaging with the world around them, that is, if there is enough space for gathering at all.
Co-working spaces are also plentiful. But they primarily exist for either businesses to operate from or people to work from solo. People need spaces to work and focus, but they aren’t exactly engaging in any habits there that will benefit their mental health.
That’s where MUD\WTR :gather comes in. You can get a tasty beverage from our coffee-free, mushroom-forward menu featuring MUD\WTR blends that promote energy and focus without the downsides of coffee. You can also step into a cold plunge or participate in a mindfulness class that supports your overall mental health.
Surrounded by like-minded people, MUD\WTR :gather exists to foster connection, community, and belonging, things our world needs.
How has MUD\WTR prepared for the challenges of operating a brick-and-mortar store in the current retail climate?
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On a macro level, there is a mental health pandemic that is fueled by caffeine addiction and hustle culture. Since 2018, we’ve already helped millions of people change their relationship with coffee — and we are just getting started.
There will always be macroeconomic challenges at play. People are more cautious than ever about spending, and winning at e-commerce alone is increasingly becoming harder.
That said, there is a market for what we’re offering. McKinsey found that 50 percent of American consumers report wellness a top priority in their daily lives, a significant rise from 42 percent in 2020. According to the Public Health Public research, 50% of U.S. adults are experiencing loneliness. Tea & Coffee with functional mushrooms and adaptogens are growing 17X faster than without, according to SPINS, and MUD\WTR is outperforming the category’s average velocities in volume and dollars by more than 75 percent.
So I think there’s a growing demand for what we are doing from our high-level purpose all the way down to the ingredients we incorporate into our products.
We could stick to D2C, but building a robust business is similar to building a robust ecosystem. You need channel diversity to last, and expanding into retail and owned retail is part of that strategy.
