Beyonce, fresh off one of the most elaborate record promotions in music history, is investing in a three-year-old startup that sells watermelon water, becoming the latest celebrity to take a more entrepreneurial approach to endorsements.
The entertainer on Tuesday announced an investment in World Waters LLC, which produces a sports drink made with watermelon juice processed at high pressure. The deal adds to Beyonce’s wellness-focused business portfolio, which also includes athletic-apparel line Ivy Park and an investment in 22 Days Nutrition, a vegan-diet kit.
Beyonce, 34, joins Oprah Winfrey and basketball star LeBron James in the growing ranks of celebrities eschewing traditional endorsement deals in favor of direct investments in companies. Winfrey bought a roughly 10 percent stake in Weight Watchers International Inc. in October for about $43.2 million, while James scrapped a deal with McDonald’s Corp. to become a partner in restaurant startup Blaze Pizza. Weight Watchers shares have doubled since Winfrey’s stake was announced.
Beyonce released her album “Lemonade” to great fanfare on April 23. The songs were featured in an hourlong special on HBO and subsequently made available for purchase and streaming on Tidal, a service owned by her husband, the rapper Jay Z. The promotion went viral on social media and generated glowing articles in scores of newspapers. According to Billboard magazine, “Lemonade” generated sales of 653,000 equivalent album units in its first week, more than any other release in 2016.
The drink company’s deal with Beyonce makes sense, said Rohit Deshpande, professor of marketing at Harvard Business School. Stars putting their money where their mouths are gives credibility to brand promotion that endorsement deals don’t, he said. Authenticity is what’s valued today, especially by millennials, according to Deshpande.
“If you are a paid endorser for a brand, there’s a skepticism on the part of consumers as to whether you’re showing this person with this product because they got paid for it or whether they actually use it,” he said. “When a person invests in a company, then there’s a feeling that that person is really interested.”
As long as the personal image of a star lines up with what a brand stands for, celebrity investments can be a windfall for companies, he said. Winfrey’s deal with Weight Watchers brought more than 1 billion free media impressions -- a feat that would have cost as much as $17.5 million to replicate, according to calculations by Apex Marketing Group Inc. James, who has 30 million Twitter followers, has taken to tweeting news about the pizza chain and wearing a Blaze hat after games. James also appeared in a YouTube video for the brand that’s been viewed 1.7 million times.
Beyonce, whose Formation World Tour kicked off April 27, has already created opportunities for the beverage, which is being marketed under the name WTRMLN WTR. It will be sold at concert venues throughout the tour and was featured in pop-up stores around the U.S. during the rollout of Ivy Park. Her investment will help accelerate the New York-based company’s reach and expansion: It projects 2016 sales will grow 385 percent from 2015, though it declined to disclose actual revenue.