Coca-Cola Co. is taking a minority stake in Iris Nova, the company behind a cashierless New York City store where customers pay for drinks via text message.
Coke, to-date the startup’s largest investor, led a $15 million investment round that values Iris Nova at about $60 million. Iris Nova is the maker of Dirty Lemon, a line of upscale drinks, including a recently discontinued one made with CBD, that found traction with customers on Instagram before the company launched its first retail location in Manhattan this year.
This gives Coca-Cola a window into a brand that has picked up customers outside of traditional retail channels, using social media and direct-to-consumer sales to drive growth. Coca-Cola is one of the most recognizable brands in the world, with a massive retail presence, but for now Iris Nova isn’t looking to expand into outlets like Walmart Inc., Target Corp. and Kroger Co., according to Founder and Chief Executive Officer Zak Normandin.
“That would dilute everything that we’ve built,” said Normandin. “We believe in a future with consumers having a direct connection to brands and you don’t get that in the traditional retail system.”
Coke made a $5.1 billion deal to buy the U.K. coffee chain Costa earlier this year. The beverage giant has also invested in smaller brands, like sparkling water company Topo Chico and Moxie, a soda with a cult-following in Maine.
In addition to Coca-Cola, former New York Yankee Alex Rodriguez, actress Kate Hudson and tech executive Tim Armstrong were among investors who took part in the funding round, according to the company.
Customers can walk into the Dirty Lemon shop — called The Drug Store — in New York’s Tribeca neighborhood, grab a drink and depart. They’re encouraged to send a text message to the company, which then responds. New customers are asked to open an account, while existing shoppers are charged. The company says it has processed about 90 percent of its orders via text, including those from online subscribers, since it started selling in 2015.