There have been no miracles to Little Saints’ success, just lots of learnings. For founder and CEO Megan Klein, those learnings have come from experience across multiple CPG ventures, starting as a co-founder of indoor hydroponic farm Farmed Here and then later as the creator of dressing and dip brand Field + Farmer. In 2020, she left the business to establish something new in the non-alcoholic category.
When it launched in 2021, Little Saints’ line of 8 oz. non-alc sparkling canned cocktails was still new to most consumers and struggled in retail. As the category has become more competitive, Little Saints zeroed in on its unique value proposition, what customers were asking for and where there was still opportunity in non-alc alternatives.
According to NielsenIQ data, dollar sales of non-alcoholic spirits was up 88% year-over-year in the period ending August 15. Volume during the same period jumped 119%. Responding to the trend and a need for more aromatic, on-premise options, Little Saints launched its 750 ml.
NA spirit (originally St. Mezcal). More than three years since establishing the brand, Klein talked to BevNET about the existential challenges of operating a NA brand, why she feels like the brand is finally hitting a sweet spot and how it has invested in its digital following to get onto more retail shelves.
: I really love making things. I’m not a food scientist, but at Field + Farmer I handled all the marketing and did the ideation for the products that we made. I’d always been very healthy during the day.
That was part of my lifestyle. For years and years, I would meditate during the day, do yoga in the morning, eat super healthy and then just have a bunch of cocktails at night. And I started to see during COVID that it was not aligned and it was really making me feel bad.
Everything that I was doing during the day, all of my mushroom powders and adaptogens, were just to make my mild hangover go away. After doing Dry January in 2021, I realized I wanted to do something that would be a nighttime beverage with mushrooms. That’s where I felt like I could be helpful to the category and create something that I really wanted to drink all the time.
It was bad business. I used to think that our customers wanted the CBD because they relied on it for the ‘take-the-edge off’ feeling. But the more surveys that we did and the more we got to know our customers, the more we realized that maybe about 5% of our customers were buying Little Saints because of CBD.
It was a deterrent. I talked to some of our best customers, and they said that they loved drinking Little Saints at-home, but didn’t bring them to dinner parties or give them as gifts because people would think [the drinks] would get them high. I realized that a lot of people in our target demographic actually did not like CBD.
What I did was found a way better mushroom extract; albeit an expensive one. I found an organic reishi extract and organic lion’s mane extract that has a 70% beta-glucan potency. (Beta-glucan being the potent part of a functional mushroom).
Before we launched the non-CBD varieties, we sent out four-packs of the new formula to our top 100 customers. I felt sure that we were going to get a lot of complaints but not one person complained. We sent out the tests in November 2023 and at that point we had plateaued at about $150,000 in revenue a month.
We launched the non-CBD in December and did $200,000 [in revenue] and $500,000 in January. In June, we broke $1 million. I had no idea CBD was that much of a hindrance to our growth.
For one we’re hardcore about always putting the best mushrooms on the market in Little Saints and we put them in a pretty high dosage. It’s a supplement dose. Another differentiator is the smell.
For example, I was really upset when I started Little Saints that bartenders didn’t want to take our cans and incorporate them into drinks. Of course I learned that they were like: ‘I’m a bartender, this is my craft. I want to make something really beautiful.
’ I talked to so many bartenders and all of them told me that the early [NA] spirits didn’t have the smell. They’re lovely but they’re just flavors. And so I knew that I needed to make some very strong extracts in order for it to hold up in a cocktail.
So that’s why St Ember has palo santo extract, a ginger extract and a cardamom extract. Those give it the smell that’s going to hold up in a cocktail, as well as the viscosity and the mouthfeel. The cans are really easy to make.
We can just whip those out. The spirits are hard because you want to get them right and they can’t taste like water. That took a year and a half.
Launching in May 2023, St. Ember is now our best-selling product by single-SKU for the last year. I self-funded Little Saints for the first year and we almost went out of business because we launched with a big alcohol distributor in California.
We just could not get them off the ground. In retrospect, I think there were two reasons why. Number one, distribution just was a disaster.
Our brand awareness just wasn’t there. We had less than 10,000 Instagram followers. No one really knew what the brand was and so it was hard to get the sales teams and the distributor on board.
Number two, it’s really hard to get onto shelves with non-alc. I bet it’s easier now, but there was just so many people to convince. We totally pivoted in 2023 and made this a DTC brand.
We’re scrappy. We just do it ourselves and people can see that it’s really authentic. Some of it’s chic, some of it’s ridiculous.
The whole thing is trying to show-not-tell that non-alc is fun and Little Saints is fun. We also spend a lot on digital. We spend over $200,000 a month on Meta advertising but it’s all coming back.
We have between 2-3x return on ad spend. So we’re making money on our ads..
