Modern Retail+ Research: How pop-ups are helping food and beverage startups grow their business

Digitally-native brands, especially those just starting to gain retailer distribution, are also heavily investing in pop-ups. “Pop-ups are becoming more and more important for all businesses that do business online because you can only get discovered in that one medium,” said Michael Brown, a partner and Americas retail leader at consulting firm Kearney. “It’s really about capturing new audiences and new customers.”

Modern Retail+ Research looked at CPG startups that are using pop-ups to test new markets and expand their reach. In Modern Retail’s sample of 21 startup CPG brands, 17 hosted a pop-up event last year. 

Aside from hosting pop-ups to offer product samples and bring their product in front of customers, brands are also experimenting with pop-ups to better determine whether physical stores are necessary. This “shop-in-shop” format is extremely attractive to small brands with limited capabilities to invest in an owned retail format. However, shop-in-shop business models have struggled in the past to stay up and running. Flagship-concept store Showfields, which had a business model focused entirely on hosting shop-in-shops, shuttered its business after mounting losses in 2023. The last Showfields stores in Brooklyn, Washington and Los Angeles closed earlier this year after the company declared bankruptcy. 

Still, some brands are still bullish on the concept. Here’s a look into how digital startups like electrolyte drink mix brand Liquid I.V., energy drink brand Lucky Energy and olive oil brand Graza are using temporary pop-ups to conduct market tests and reach customers with a unique brand experience. 

Methodology

Modern Retail+ Research analyzed the pop-up events and activations that 21 CPG startup brands held during the time period July 1, 2023 — August 1, 2024. The brands were chosen by the editorial team based on past coverage and Modern Retail’s industry analysis of scaling startups.  

We also conducted a focus group with executives from Liquid I.V., Lucky Energy and Graza to learn first-hand about the activation strategies these startups are using to grow brand awareness and increase product distribution. 

CPG startups use pop-ups for  multi-city market testing  

The mobility and flexibility of pop-ups is a main attraction for brands. Rather than investing in a permanent flagship store or traditional retail location, pop-ups allow brands to establish a presence in multiple locations around the country and increase brand awareness at a lower capital cost. 

For many brands, like Liquid I.V. and condiments brand Primal Kitchen, in-person activations have been a large focus over the last 12 months and have provided learning opportunities for the startups. “It gives us a good opportunity for market testing, so we can test new products, new concepts in different markets, and understand how those consumer insights are coming in differently,” said Stacey Andrade-Wells, CMO at Liquid I.V. 

Primal Kitchen partnered with Pinterest this year to visit New York City, Chicago and L.A. with its “Colorful Kitchen” pop-up. According to Ana Goettsch, Primal Kitchen’s head of marketing, the pop-up was an extension of the out-of-home and in-person activations Primal Kitchen has been rolling out over the past year. 

Brand exposure is vital for emerging brands like Primal Kitchen, and the push for in-person brand building to reach mainstream audiences is a common goal for startups looking to expand their reach and notoriety. By traveling to multiple locations, CPG startups can increase a brand’s footprint by bringing product samples and IRL brand experiences to new areas. 

In Modern Retail’s study, nine of the 17 brands that organized a pop-up last year scheduled stops at multiple cities and locations across the country. 

“A static flagship store is really limited to the people who are able to access that in a given location,”  Liquid I.V.’s Andrade-Wells said. “For us, having an activation that can travel around the country is helping to expand the reach, the amount of sampling we can do of our product and, overall, the national brand awareness rises.” 

The most popular pop-up locations for all nine brands were New York City and Los Angeles. However, holding pop-ups in other areas of the U.S. is equally important for most brands in order to build up retail distribution and awareness outside of New York City and L.A. Cities like Austin, Chicago, San Francisco and Boston were also important test zones for these brands. 

Lucky Energy also uses every temporary pop-up activation as an opportunity to evaluate new creative ideas. Hamid Saify, Lucky Energy’s CMO, explained the brand’s typical approach to market testing during pop-ups. “[We take a look at] what is the thing that is really going to drive people to this pop-up? It’s not so much led by the product, but more so by the experience, and that might change from city to city,” Saify said. “We find a recipe that works, that becomes easily scalable across markets.”

Although young brands may not yet have the brand notoriety to attract a large audience of visitors, the limited availability of pop-ups builds up a sense of exclusivity and an urgency to attend among patrons. Pop-ups excite consumers because once a pop-up is over, it is gone forever. This play on exclusivity helps promote attendance and buzz. But it’s up to marketers to capitalize with an unforgettable experience that promotes future purchases and brand interest. That means creating a unique can’t-miss experience for consumers. 

“When you have something that’s popping up for a limited time only, it helps generate grassroots word of mouth and excitement with consumers about the brand,” Liquid I.V.’s Andrade-Wells said. “They’re going to gather all their friends and try to be there in time for that maybe two-day window in a specific city.”

Some brands with an established user-base, are also playing on exclusivity for VIPs. To celebrate the launch of a new flavor, Poppi hosted a pop-up in L.A. that offered various exclusive opportunities. The pop-up, called Poppi Mart, was a futuristic twist on a convenience store to build on the brand’s “Future of Soda” campaign. The brand hosted a VIP party on opening night with a DJ set by Paris Hilton. The following day, the pop-up opened to the public. Inside, visitors of the pop-up were able to purchase limited-edition brand merchandise specifically designed for Poppi Mart and attend a meet-and-greet with founder Allison Ellsworth. 

Overall, the market tests startup brands conduct during pop-ups offer them valuable insights to help them reach the right audiences and to cultivate effective creative entertainment and member offers. The sense of exclusivity that accompanies a temporary pop-up also helps brands increase the chances that the event will be filled with eager brand lovers and curious new customers. 

ROI is difficult to measure for pop-ups, but brand love is noticeable

In Modern Retail’s focus group discussion, it became clear that ROI is not easy to measure for pop-up events. In fact, focus group members agreed that if marketers are looking for an activation with a clear and measurable return on investment — pop-ups may not be the best avenue. 

“I will candidly tell you that if you’re looking to drive a very clear, measurable ROI, there are probably other tools and tactics that are better suited for that,” Liquid I.V.’s Andrade-Wells said. “I really view this as a vote in the role of brand love, brand equity, brand awareness and the role that a memorable experience plays in building community love for your brand.” 

For most brands, the response they receive from consumers after a pop-up is their general measurement of event success. “Our primary goal has been driving brand love and awareness,” said Kali Shulklapper, director of marketing at Graza, when asked about how Graza measures the success of its IRL events and pop-ups. “I’ll be the first to admit, we’re not really looking at ROI in the traditional sense, but we are looking at what people are saying on social, what they’re DM’ing us after the event, the photos that are being taken there, and just assessing the general vibes of the day,” Shulklapper explained. 

Aside from measuring social media activity like brand tags and mentions, some brands have gotten creative about how they measure the success of a pop-up activation. Liquid I.V. uses direct feedback from consumers and event partners like Live Nation. “Our first objective is always to learn. We’re really eager to hear from people who have stopped by the event. What was their experience with our brand and how can we continue to surprise and delight them?” Liquid I.V.’s Andrade-Wells said. “If you look at festivals, and our partnership with Live Nation, we’ve been able to get a lot of research from them that says that Liquid I.V. ranks as one of the top 10 most visited activations during the 2024 season across all Live Nation properties.”  

Others track customer participation in pop-up promotions and digital sales, to assess a pop-up event’s sales impact. Lucky Energy, for example, sent influencers to Coachella to hand out scratch-off lottery tickets with prizes like free cases of Lucky Energy drinks and $500 flight vouchers. Lucky Energy was able to measure how many people reached out to the brand afterward to claim prizes. 

Along with tracking the Coachella scratch-off claim rates, Lucky Energy noticed an increase in digital sales on Amazon during Coachella weekends. “We looked at our Amazon daily sales performance, and our average sales had increased by over 50% on those days that we were activating at Coachella,” Lucky Energy’s Saify said. Brands have found indirect measurements to observe and gauge future activation strategies.

Samplings, exclusive experiences and merch offer the most impact at pop-ups

The brand executives that participated in Modern Retail’s focus group said they have found that offering product samples and incorporating a brand experience with a pop-up are key to making a pop-up successful. “One of the biggest, impactful things has been our sales team and brand ambassadors sampling product, telling the story and giving away merch,” Lucky Energy’s Saify said. “We’ve had really good feedback with just the tried and true stuff.”

Liquid I.V.’s Andrade-Wells agreed. “This is a huge moment for product sampling,” she said. “We call [our sampling program] ‘sticks in hand.’ This year, with our festival activations, we actually increased our sticks in hand by over 30% in 2024 versus 2023. So, that’s a really key component for us.”

Other CPG startups seem to agree. In Modern Retail’s sample, all of the pop-ups analyzed included some form of product sampling. Nearly half (41%) included an immersive experience or activity. 

The brand executives Modern Retail spoke with offered various opinions on how to differentiate a brand’s pop-up from a sea of competitors. “Have something little that encourages people to participate in some kind of active way, and not just show up and get something for free, or get a piece of merch,” said Graza’s Shulklapper. “Doing something that really encourages them to get involved in a more hands-on way is really important to creating a very memorable experience.” 

Similarly, Lucky Energy’s Saify advises that customer participation requests should be kept simple. “Simplification is key for us. And, in key moments, not being overly branded,” he said. 

In order to avoid giving consumers the impression that a pop-up event is being used as a marketing gimmick, many startups try to find pop-up opportunities where their product naturally ties in with the occasion at hand. 

For Liquid I.V., public events like music festivals are an ideal location for the brand to offer samples of its products because the product usage aligns with the event. “The four usage occasions that we focus on are exercise, heat-related dehydration, travel and nightlife recovery,” Liquid I.V.’s Andrade-Wells explained. “So, in terms of those four usage occasions, festivals are typically quite a beautiful intersection.” 

For startup olive oil brand Graza, finding an optimal product usage occasion is a harder challenge. “No one is chugging olive oil on its own. It usually has to be paired with some other kind of food product,” Graza’s Shulklapper said. For that reason, Graza’s pop-up activations have been limited.  

In May, Graza held a pop-up activation in New York City to promote the launch of the brand’s refill cans. The brand invited the local community to spend the day at McCarren Park and bring an empty Graza squeeze bottle or any vessel to receive a free refill of Graza olive oil. According to Shulklapper, the event was a great success and a relatively low lift for the brand. “I think finding creative ways to give out free product is important,” she said.  

Food brands like Graza or condiment brands like Fly by Jing or Truff that need an additional food pairing have a lower frequency of pop-ups compared to beverage brands. In fact, two-thirds of the pop-ups analyzed were organized by a beverage brand, while only 34% were held by food brands.

However, food brands are becoming more creative with integrating their products at large events, while keeping capital investment as low as possible. “We have been very fortunate to get in by way of donating product and not investing a ton of resources, time and money into popping up with our own booth,” Graza’s Shulklapper said.

The same goes for Lucky Energy. “Because we are a smaller-stage brand, we find ways to get into the conversation without having to pay the dollars to get into these worlds right now,” Lucky Energy’s Saify explained. 

Ultimately, finding innovative ways to encourage consumers to try a new product is of paramount importance for CPG startups, as they compete with household name brands with the marketing budgets of established food and beverage companies behind them.

Key findings

• Startups are using pop-ups to market test new products and creative concepts.
  • Nine of the 17 brands in Modern Retail’s study that organized a pop-up over the last 12 months scheduled stops at multiple cities nationwide. 
  • The most popular locations for all nine brands were New York City and Los Angeles. However, cities like Austin, Chicago, San Francisco and Boston were also important test zones. 
• ROI is not an easy metric to measure for pop-ups, but brand love can be.
  • After an activation, brands track social media mentions and brand tags as well as  direct feedback from consumers and event partners.
  • Some brands track participation in promotions offered during pop-up activations and digital sales after an event to better understand sales impact.
• Product samplings and unique brand experiences make the most impact at pop-ups.
  • All of the pop-ups analyzed (100%) included some sort of product sampling. Nearly half (41%) included an immersive experience or activity. 
  • Having a unique brand experience that encourages attendance and participation in a pop-up helps a brand differentiate itself from the competition, but it’s important to keep these tasks simple.