Dirty Lemon, a beverage brand with a cult-like following on Instagram, is opening its first store

Key Points
  • Dirty Lemon's first store opens this week. 
  • The space in New York's Tribeca is unique because part of the store will be unstaffed, and shoppers can purchase items using only their cellphones.
  • Dirty Lemon says it will be shifting "all of its digital marketing spend to retail in 2019."
A selection of Dirty Lemon drinks, which include flavors infused with charcoal, collagen and cbd oil.
Source: Dirty Lemon

Dirty Lemon, a beverage brand that was born online and developed a cult-like following via millennials' Instagram posts, is opening its first store this week.

The charcoal, matcha, rose and ginseng-flavored beverages once only attainable online will finally be on shelves for shoppers to touch and feel in New York. Moving somewhat in reverse, Dirty Lemon is opening its first bricks-and-mortar location as many brands are trimming back their physical footprints. The store will put Dirty Lemon's health-conscious drinks more within reach for New York customers, to start, and help raise awareness of the trendy brand beyond social media and the internet.

"A lot of brands are struggling in retail right now," CEO Zak Normandin told CNBC. "They are starting to shift marketing dollars into digital to keep customers engaged. That creates a challenging situation for us, because we have relied on digital marketing to grow our following, but we are ironically now shifting dollars to physical retail."

Dirty Lemon's first permanent shop, located in the Tribeca neighborhood on Church Street, is unique because part of the space will be unstaffed. The company describes it as a "walk-in vending machine," where shoppers can use their cellphones to text, order and pay without ever swiping a credit card or interacting with a human being.

While the company wouldn't say exactly how many such stores it plans to open, Dirty Lemon said it will be shifting "all of its digital marketing spend to retail in 2019."

The store will have a heat map tracker installed at the door, which will monitor footsteps coming in and out of the space every day. RFID technology installed in the coolers inside will help keep track of inventory being purchased and restocked.

"The big vision for our company is to disrupt the way beverages are distributed to consumers," Normandin said. "We want to be where people live work and play."

Unlike many traditional retail brands, Dirty Lemon's business was built with mobile in mind. Shoppers sign up online to make purchases, linking their credit card numbers to their cellphones. From there, customers are able to order six-packs of Dirty Lemon beverages by simply texting a special order number to the company.

Normandin said he wanted to be sure this technology was incorporated in Dirty Lemon's shop. Ninety-five percent of Dirty Lemon's sales have come through mobile devices, with the reset stemming from a few partnerships that the company is testing with wholesalers.

The first Dirty Lemon store will also have a bigger space situated behind the front retail portion for its "VIP customers," or those people who are ordering at least one six-pack of Dirty Lemon drinks per month. (The drinks retail online for $45 for six 16-ounce bottles.) Customers there will be able to try mixed drinks that are a unique twist on Dirty Lemon's classic flavors while enjoying events like live concerts. This portion of the store isn't set to open until later this fall.

As the brand looks to gain popularity, Normandin said there's been an uptick in interest from celebrities to invest in Dirty Lemon. Already, celebrities like model Karlie Kloss, actress Kate Hudson, and rapper Cardi B have said they drink Dirty Lemon beverages.

The company hasn't disclosed how much money it has raised but said investors include GGV Capital, Greycroft, Imaginary Ventures, Lakehouse Ventures and Winklevoss Capital.

While it's just one store to start, Dirty Lemon's storefront opens new possibilities for landlords who are filling the space from a wave of store closures.