What was once simply well-supported rumors has now turned into confirmation with an investment prospectus, official trading dates, and lots of legacy financial media hype. So, it’s probably best that I update my Applied Nutrition IPO content from earlier this year, right? About a week ago, Applied Nutrition officially turned those late-2024 IPO rumors into reality by filing the appropriate investment paperwork. But while the global IPO activity has certainly been stagnant over the last few years (and investors are salivating for action), this Applied Nutrition IPO is arguably getting so much attention (at least from functional CPG industry professionals) is because there just haven’t been many sizable sports/active nutrition brands going public globally in the last five years. Yet, as I’ve stated previously…sports/active nutrition is the “influential epicenter of all ingestible CPG categories,” there’s an ongoing competitive landscape “changing of the guard” happening within every multibillion-dollar functional CPG platform, and it’s just a matter of time before more sizable sports/active nutrition brands (or brand portfolios) will begin disrupting the global stock markets. But this Applied Nutrition IPO could become an important catalyst that builds momentum for similar activity over the next 12-18 months. As for the specifics, unconditional trading of the Applied Nutrition IPO is expected to start on October 29, 2024. Additionally, in terms of of the total share count available (and IPO share price), Applied Nutrition market capitalization would range between $440 million and $520 million. But in my latest first principles thinking content, I'll examine what needs to happen for Applied Nutrition to operate efficiency within the dynamic global functional CPG industry and become that valuable public company long-term. That includes assessing its business model, vertical integration, sales channel and geographical market expansion, and multiple pillars of growth. But for this final section of the content…I'll breakdown the strategic actions of the U.S. subsidiary of Applied Nutrition, which is arguably the most important market if they want to become that valuable public company long-term.

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The primary challenge of licensing lies in maintaining brand consistency across different artistic mediums. For example, what best personifies an iconic Hip Hop artist, group, or even record label…in the form of a packaged beverage? It’s not the easiest design objective to flawlessly commercialize. Especially when you consider that mismatching the IP and the licensed product can pose a significant threat to the brand's reputation and image. We’ve seen a brand like Wu-Tang Clan seemingly pluck strategies straight out of their music. As I’m still confused about a brand named HARD that only sells non-alcoholic beverages. Alternatively, Dr. Dre and Snoop Dogg approached it more intentionally by collaborating on an RTD cocktail inspired by the duo’s iconic “Gin & Juice” song. But even selecting the right partners (with Happy Dad Seltzer) helped Death Row Records be successful within packaged beverages.

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How society defines “being healthy” is evolving and becoming more holistic. And with more individuals viewing themselves as consumers in the healthcare market compared to solely being patients, it has created immense opportunities…with U.S. consumers spending billions annually seeking to improve their “health span.” Because at the end of the day, what people really want is “not just more years to their lives” but also “more life to their years.” So, it’s difficult not being fascinated by the evolving marketplace…which is why Senior Market Insights Director at SPINS, Scott Dicker, and I decided to tackle the cultural phenomenon that I recently dubbed “healthy longevity” in our newest quarterly functional CPG categorical deep dive. But addressing this changing landscape…from the shifting perception of age and multigenerational consumer cohorts to product innovation trends and reframing of functional ingredients is quite the complex undertaking to effectively tackle in under an hour. That being said, Scott and I did our absolute best to spotlight powerful “drivers of demand” and connect them to the top nutritional, physical, mental, and emotional health need states that empowers CPG brands in the "healthspan era." Moreover, we examine a few seemingly disparate data points that should not be overlooked when considering the [no pun intended] longevity of this immense commercial opportunity for the emerging and intersections CPG categories of functional foods, functional beverages, and nutritional supplements. But these are just some of the interesting topics we chatted about in this episode...

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What does the Terminator, artificial intelligence, and Bang Energy founder (and former CEO) Jack Owoc have in common? Well…if you hadn’t seen the recent energy drinks market news yet, it’s probably A LOT more than you imagined! For those that didn’t see the announcement yet, Bang Energy founder (and former CEO) Jack Owoc is launching a new energy drink called AI Energy. And if you were wondering…the AI in AI Energy does indeed pay homage to artificial intelligence technology. In fact, many aspects of AI Energy from its visual identity to its digital media assets were developed with AI image generation software. According to the website, AI Energy will utilize a 12-oz sleek can and initially be available in four flavor variants. Based on the earlier comments from Jack Owoc (and seeing the supplement facts panel), AI Energy will be within what I call the “focus, cognition, and nootropic” segment of the performance energy drinks subcategory. Beyond the typical exclusionary callouts (like zero sugar or artificial colors) within the performance energy drink subcategory, Jack Owoc focuses on three other (let’s call them lesser known by the mainstream market) ingredient concerns that are avoided by AI Energy that includes natural caffeine, cyanocobalamin (synthetic form of vitamin B12), and alpha GPC. As for the retail, distribution, and marketing strategy for AI Energy, Jack Owoc is going back to his VPX Sports roots by working with “nutrition and gym channel” distributors Europa Sports Partners and Muscle Foods USA. But beyond focusing on those small but influential sales channels for performance energy drinks, AI Energy will also build out an independent DSD network to service convenience stores and large retail accounts…with my assumption being that many will be previous partners that helped grow Bang Energy before the initial PepsiCo buyout. And then another strategy that Jack Owoc is planning to leverage from his previous Bang Energy success is that large roster of social media influencers. Yet, beyond a few of those strategic commercialization commonalities…you’ll notice Jack Owoc has shifted from the “let’s own everything” asset-heavy business model of Bang Energy to now an asset-light approach. But with a brand name like AI Energy…deploying AI in a manner that can condense operations, write distributor contracts, and/or design visual aspects would be aligned with its strategic narrative, right? But with that being said…my wonder surrounds why AI Energy would even work want to work with hundreds or thousands of social media influencers again anyways, especially when there’s swarms of virtual influencers that are looking more like humans each day. Regardless of how that AI marketing strategy ultimately plays out…my guess is that many of you are wondering if I think AI Energy will be successful or not. And I'll explore that in this content...which has some intermingling with my thoughts around the race within the CPG industry to capture value from artificial intelligence.

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There’s a famous Wayne Gretzky quote that’s been repeated many times throughout my content over the years. You know the one…say it with me, “skate to where the puck is going, not where it has been.” And I’ve probably repeated it more times than I should because it’s one of those superb analogies that blend my love of sports and business strategy. But there’s a flipside to this mantra, one that doesn’t get talked about nearly enough throughout the CPG industry. And while my conversation with Carl Goyette (CEO of GURU Energy) covers just about every “pocket of space” that has emerged recently within the ever-evolving U.S. and Canadian energy drinks market, you’ll also be able to pick up on that “reverse Gretzky mantra” risk. But beyond that wide-ranging strategic categorical chat, Carl and I also spent time talking about the decision for GURU Energy to become a public company four years ago. Moreover, how those investor expectations (along with the evolving energy drinks market dynamics) have impacted the company’s strategic decisions. Though (and to keep with the hockey reference), sometimes when you find pockets of space where you can work…if you do things right, you’ll become even more prepared for when the puck might come your way. And as you’ll hear in the content, this is where I think GURU Energy sits right now…exercising strategic discipline and focusing on the actions that will give the energy drinks brand a way to create true long-term differentiation in a crowded market. But these are just some of the interesting topics we chatted about in this episode. And then finally, for those in my community that have been harping on me that I haven’t updated my GURU Energy commentary since that first public quarterly earnings report from March 2021…I hope this content more than suffices for that delay.

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47,000 convenience store owners have spoken, and they provided important insights on the growing energy drinks category. And even if you aren’t familiar with every insight regarding this beverage category, I’m sure you intuitively recognize that convenience is the most important sales channels for energy drinks in the U.S. market. But here are my top 3 biggest “categorical” takeaways from the recent Goldman Sachs Beverage Bytes survey. The first surrounds the Spring 2024 shelf/cooler reset season…with the two biggest winners being CELSIUS (up on average 10%) and C4 Energy (up 7%). The second is that c-stores feel decelerating volume growth is stemming from lower income consumers continuing to face financial challenges. And finally, an increase in Memorial Day promotional activity (especially 2-for-1 deals) helped jumpstart summer sales growth.

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After 35 years of dominating grade school cafeteria lunchtime, that yellow box filled with hyper-palatable foods is getting “remixed” by the creator packaged goods movement. For those that are living under a rock and didn’t see the product announcement from a few weeks ago, Lunchly is a kid-friendly meal kit that’s positioned as a better-for-you competitor to Lunchables. Now…there’s already several other better-for-you Lunchables competitors in market, but what makes this one noteworthy is that it’s a joint venture between two creator packaged goods brands. Lunchly was a collaboration between PRIME (the beverage brand backed by Logan Paul and KSI) and Feastables (the chocolate brand created by MrBeast). To be completely honest, this is a wild move. So, each box of Lunchly will include a miniature Feastables bar and bottle of PRIME Hydration. Lunchables created line extensions with Snickers, Reese’s Peanut Butter Cups, Kool-Aid, and Capri Sun…but we’re talking about two creator packaged goods brands that are co-creating a new “more perishable” product that also sees them both entering a new grocery retail section. So, then the question likely turns to why? Similar to when Lunchables was being developed in the 1980s, there’s maybe the obvious and not so obvious answer. Based on the marketing angle taken thus far, the obvious answer is that Lunchly saw a market opportunity that paired all the previous (and still strong) Lunchables value propositions for parents (like convenience/value) and kids (like wanting to be cool in the school cafeteria), with these better-for-you product attributes. Regardless, Lunchables was actually created to solve a bologna oversupply (and popularity) problem for Oscar Meyer. And though I don’t think anyone involved with Lunchly intentionally created this historical “remix,” PRIME is facing similar oversupply (and popularity) problems right now. According to recent NielsenIQ data reports, PRIME volume has been falling by somewhere around 30% YoY for much of this calendar year. But more interesting to the Lunchables connection is that PRIME has been the target of recent litigation from its supply chain partners…with lawsuits alleging dedicated contract manufacturing capacity investments left unutilized and coconut ingredients contracts cancelled. Additionally, my latest first principles thinking content will explore the historical connections between U.S. food companies by tobacco giants, how Phillip Morris (now Altria) were masters at engineering products to make consumers return for more, and how those hyper-palatable foods are now approved by the U.S. government (USDA) to be included within the National School Lunch Program.

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Allulose is a naturally occurring sugar found in fruits like figs and raisins. According to a recent batch of SPINS innovation index data, Allulose was absurdly out indexing all other sweeteners across the entire grocery store. So, why is allulose banned by Whole Foods Market…and not approved yet for use in Canada and Europe? Maybe because most Allulose is synthesized in a lab, most likely from corn…processed with a genetically modified enzyme. Is Allulose natural…Artificial…GMO or not GMO, heck I enjoy sucralose containing energy drinks daily, so I’m far from the sweetener police. But do the natural CPG entrepreneurs really think that studies showing “Allulose enhanced the GLP-1 activity in rodents” will help clear up the court of public opinion on the trending sweetener?

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A few days ago, images started popping up on social media platforms that showed Starbucks in-store signage giving customers the option of ordering “nutritional blends” that includes AG1 greens powder. And while that partnership didn’t seem far-fetched at all to me…it did have many people in the comments questioning if the images were AI-generated. Maybe that's just a “sign of the times” where you can’t trust anything you see on the internet, but also likely because it’s a small test currently in four markets…and Starbucks themselves put out any information on the AG1 partnership. The only verifiable information on the Starbucks AG1 partnership has come from the Athletic Greens social media accounts confirming the images were real and the supplement brand’s CEO Kat Cole providing some additional details within the comments of the most popular social media posts on LinkedIn. But beyond the test market location details, Kat Cole also confirmed that they’re testing three different Starbucks AG1 Nutritional Blends product variants (two of which are low sugar). In my opinion, this collaborative move (even if its only a test right now) is further confirmation of Athletic Greens doubling down on a competitive advantage. And while AG1 does A LOT of impressive stuff strategically, my latest first principles thinking content will be focused on analyzing a few of its partnership strategies including Starbucks AG1 Nutritional Blends foodservice partnership, WHOOP brand partnership, influencer and creator partnerships, and podcast sponsorships. And then for this final portion, I'll breakdown the competitive but still very much nascent greens supplement market and how that supplement category’s evolution and maturation could impact the next moves by Athletic Greens...which included a signal that AG1 could be showing its availability and interest to private market dealmakers and the public capital markets.

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Longevity has become a cultural phenomenon…and that should be making functional CPG entrepreneurs salivate more than all those customers providing samples for DNA test kits. Did you know that more than half of Americans say it’s their goal to live to 100? But becoming a centenarian wasn’t always a goal sought by most Americans…partly because of what I’ve dubbed the “Mrs. Fletcher Effect.” You might be too young to remember these famous early-90s "I've fallen and I can't get up" TV commercials, but the frailty of Mrs. Fletcher certainly didn’t help public perception of aging populations. Alternatively, when you see “Mrs. Fletcher” typecast in today’s connected TV digital ads…she would be shown playing chess, running a marathon, starting a new business, or traveling extensively with family. But it’s that simple (but massive) paradigm shift, around the image of growing older, which created many second-order effects. Because even if almost everyone accepts that “Father Time” will remain undefeated, more people are realizing they can have some control over the pace and trajectory of functional decline. This behavioral change arguably gained importance in the last decade, as more individuals began viewing themselves as consumers in the healthcare market compared to solely being patients. Because of that, consumer healthcare has begun evolving from a reactive, one-size-fits-all approach to a distinctively proactive, personalized, and integrative approach. But as you’d imagine…that marketplace evolution has created immense opportunities, with American consumers spending billions annually seeking to improve their “health span,” a popular term defined the period of your life that’s spent healthy, rather than simply how long you will physically be alive. A key aspect of this massive opportunity centers around the fact that Millennials and Baby Boomers have increasingly mirrored one another in adopting healthy lifestyle habits. And while it doesn’t happen often, duality can be an extremely powerful force when considering the potential impact of a CPG industry trend. But with consumers of all ages (not just the older ones) looking for ways to extend the number of years they spend free from chronic disease…as well as the physical, cognitive, and emotional decline that can accompany aging, its certainly great news for CPG brands positioned within the emerging and intersecting categories of functional foods, functional beverages, and dietary supplements. And to help entrepreneurs in that pursuit of discovering attractive commercial opportunities, my latest first principles thinking content will cover the top need states (and key functional ingredient trends) within longevity and healthy aging, which includes cognitive health, mobility, muscle health (and strength), cellular health, and better appearance. Finally, I'll quickly run through an often-overlooked consumer insight and marketing strategy that's key to unlocking the booming business of longevity.

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