Sometimes a relative stranger, during a small collection of conversations, can make an outsized impact by suddenly awakening a light within you. If you think that sounds like hyperbole…how about I share my recent experience with this phenomenon. In the last several years, I’ve had a handful of beverage industry friends tell me to check out this tea-plus brand named Equitea. Admittedly, in a rushed state…I would glance at the product pages and say something relatively positive about the emerging category and/or its product composition and packaging. But it wasn’t until Danny Stepper asked me to moderate a panel at The Beverage Forum that changed everything. As I’m putting together the conversation framework…I start digging deeper into Equitea because its co-founder and CEO, Quentin Vennie, was one of the panelists. This is when I learned about the founding reason for Equitea and then the more recent tragic event that evolved the brand purpose. Maybe it was partly due to the proximity of myself becoming a new father, but suddenly I felt this amplified connection to Quentin’s story. Getting to know him better (on- and off-stage) became the unexpected (but in a totally good way) top highlight of mine from The Beverage Forum. And as you’ll quickly notice, this recorded conversation feels like it just rolls right into it…and that’s because it was a totally authentic human interaction that Grant captured after we got off stage together. While that might feel a bit different than typical story arcs in previous episodes, this whole “Pivotal segment concept” was created because I wanted to break down barriers and show the human beings that exist beyond these CPG brands. With “great products” becoming ubiquitous across the CPG industry, they must evolve into a vehicle to build rich compelling stories that create consumer connection. In this case, it’s packaged tea-plus products called Equitea that exists to destigmatize mental health, expand pathways to wellness, and help make cognitive wellness-centered products more accessible and equitable. Finally, for those that want to hear more from Quentin, the accompanying Joshing Around "The Beverage Forum 2024" vlog episode (that will be uploaded to my YouTube channel very soon) should help fill that void and likely add more context to portions of this recorded conversation.

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There’s something extremely admirable about those that “fight for the little guy.” Having worked in large CPG conglomerates like Mars, Daniel Scharff knew the advantages these mega companies have over small brands scratching and crawling for any opportunity. So, in late-2019…he began hosting Bay Area events that gave founders of the smallest emerging CPG brands a chance to demo products and network. But we all know what happened next, though being forced to pivot towards building virtual community the following year might have been the silver lining for Startup CPG. Instead of pausing everything, Daniel didn’t lose sight of his original intent. These smallest CPG brands were most affected by delays in planogram resets, so Startup CPG quickly developed helpful content, tools, platforms, and creatively sourced other incredible sales opportunities that helped minimize negative impact. And it was that initial value provided, when founders arguably needed it the most, that reverberated quickly amongst the community, thus helping catapult Startup CPG into becoming the largest and fastest growing CPG community. In our conversation, Daniel explains how this business growth has allowed Startup CPG to host more community events around the country, launch even bigger programs to help brands with what matters most, and form influential strategic partnerships. Moreover, and relating to that last point with its “GNC Next Big Thing” contest…we talk about the power of authentically putting yourself out there and staying real and transparent. But these are just a few of the fascinating topics within our recent conversation…

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Pizza and Beer. We take the pairing for granted…despite it being a must-have at any party and a marriage ingrained in our gastronomic culture. The simple and humble combination of pizza and beer represents more than the sum of its parts…which is especially true when we look at it through a recently announced bold co-branding lens. Nestlé-owned pizza brand Tombstone is teaming up with New Belgium to create pizza-flavored Voodoo Ranger IPA. Without a doubt this product collab is awesome…but how do we make the tie-up even more impactful? I’d utilize Tombstone as the anchor by securing an end cap in the frozen foods section. Then, I’d add a flashy (but small) floor display with the pizza-flavored beer next to the coolers. And for good measure…offer customers a coupon when they buy both products together. Now enjoy!

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Ready-to-mix (RTM) powder to ready-to-drink (RTD) liquid format expansion could very well become the dominant build model process amongst functional beverage entrepreneurs…though a recent hydration category example could be elemental in proving my strategic thesis correct. While I might be a bit biased considering my professional background, I believe the sports nutrition space has always been the “often imitated, never duplicated” influential epicenter of all ingestible CPG categories. But many years ago…when I said things like “the best and brightest sports nutrition brands could compete against any large CPG incumbent when it comes to functional food and beverage,” it got its fair share of laughs. But then the massive mainstream success of Bang Energy happened in the late-2010s…and suddenly, my early conviction around a non-consensus view began to not look so crazy. Moreover, it also consciously (or subconsciously) inspired many sports nutrition brand entrepreneurs to take the leap from powder supplements to beverage. And though it’s several years behind the energy category’s “changing of the guard,” the same “RTM powder to RTD liquid” strategic format expansion playbook is starting to pick up momentum within the hydration category. Yet, my “beverage identity crisis” thesis within the hydration category still needed that one “mega brand” example to really catapult it forward. What I didn’t know at the time was that a month later, LMNT would announce on its social media that after two years in development, the brand would launch LMNT Sparkling Electrolyte Water, an RTD version of its extremely popular powdered stick pack hydration supplement. According to audited financial numbers filed with the SEC, LMNT generated just over $206 million in net sales for the 2023 calendar year (up 162% YoY). In terms of profitability, LMNT had gross margins of 56.7% in 2023. And I give them major kudos for the initial online launch strategy, but the sports drink market isn’t won or lost over transactions on Shopify and/or Amazon. So, despite the perfectly controlled launch execution and online commercialization strategy…LMNT still needs to address its next big challenge within the packaged beverage commercialization gauntlet, expanding into large wholesale channels. Though by saying that, I’m not advocating that LMNT should go too-wide too-fast with that sales channel expansion. In fact, LMNT is sitting pretty right now…generating close to $42 million in net income last year. That means they can “fund” the digital-first beverage strategy and fail forward as they learn the offline retail sales and beverage distribution game. Similarly, LMNT has been frugal and scrappy in how it raised outside capital, which limits pressure to be aggressive for liquidity event timeline purposes. But saying all that…I think LMNT should consider a strategic investment from an industry leader that has the expertise and resources that can enable the brand to scale more effectively in this next format and channel diverse phase. Nutrabolt (owner of C4 Energy) wants to build the health and wellness version of Unilever. While some portfolio expansion might come from internal brand development, I believe most will happen because of accretive deal making and full-on acquisitions that extends Nutrabolt into more key consumer-driven wellness platforms. While Bloom Nutrition was Nutrabolt's first minority investment…it won’t likely be its last, and maybe LMNT would be a great second act to get more exposure to the hydration category.

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Doesn’t it seem every beverage category is not what it used to be…as consumers are drinking up beverages that have benefits beyond just quenching their thirst. Even the largest (most sacred) packaged beverage categories are no longer safe…as carbonated soft drinks volume have been declining for much of the last decade. Consumers continue to move closer towards this four-way intersection of taste, convenience, nutrition, and functionality. And functional sodas…that often have a focus on adding prebiotics, plant fiber, or botanicals to support gut health, fit right squarely in the middle of that! What has always made this emerging category so intriguing to me stems from the fact that consumers can make a healthier choice without really changing a lot of their typical behavior. That’s a slam dunk in my world, but this story isn’t only being told by functional soda brands like Olipop and Poppi. In fact, I believe I’ve found the hidden gem of the entire category. And in the episode, I’ll be chatting with the co-founders of Mayawell…Vicente Reyes and Oliver Shuttlesworth. Beyond sharing some founding story details, we discuss the inspiration for the Mayawell product composition and why that differentiation is an important foundational pillar. We also talk frankly about the early ups and downs that startups face when operating within nascent beverage categories. And why marketplace maturity sometimes provides the clarity needed to make bold branding adjustments that bring the entire strategic narrative to life. Moreover, we breakdown the functional soda categorical evolution that now sees Mayawell (and others) taking closer aim at Big Soda. But these are just a few of the fascinating topics within our recent conversation…

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Over the last dozen years as a CPG industry strategist, I’ve seen A LOT of “trade-in promotions” used across different product categories to meet different business objectives. Maybe a CPG brand wants to support its sustainability credentials through recycling incentives. Or maybe it’s focused around rewarding customer loyalty when exchanging an older product version. Though often it’s utilized when a CPG brand believes it has a superior product to categorical incumbents that’s unnoticed by the market. As an example, Heyday Canning recently created a pop-up shop that allowed visitors to exchange a competitor’s product for a can of Heyday Beans. Alternatively, the most unique recent example of a trade-in promotion was when Cleveland Browns sponsor, DUDE Wipes, gave fans a chance to swap out their old jersey from any of the previous crappy 37 quarterbacks for a new white jersey.

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Is there a hidden meaning behind FitLife Brands calling MusclePharm “our most significant organic growth opportunity”? For those unaware, the supplement brands that are within the FitLife Brands portfolio are now categorized in four segments…NDS Products (which are a collection of brands mostly sold in the GNC franchise system), iSatori Products (which are a collection of brands sold through a diversified retail mix), Mimi’s Rock Corporation Products (which are a collection of brands mostly sold on Amazon), and then MusclePharm Products (which was acquired on October 10, 2023). In total, the FitLife Brands portfolio is sold through more than 20,000 retail locations globally. In the first quarter of 2024, FitLife Brands Inc. (NASDAQ: FTLF) had revenues of $16.5 million…which was up 54% YoY. On face value that obviously looks impressive, but you had both the Mimi’s Rock and MusclePharm acquisitions that happened in 2023 and greatly impacted the comparable growth percentage. If you look at the revenue from a QoQ perspective, FitLife Brands revenues increased around 24%. While there's strategic initiatives going on at legacy FitLife Brands and Mimi's Rock, the most intriguing segment within FitLife Brands is also currently its smallest...MusclePharm. In the first quarter of 2024, MusclePharm segment revenue was $2.1 million. And if you were wondering about YoY comparatives, let’s just say the Eric Hilman run MusclePharm bankrupt version outsold this current version. But that’s probably an apples-to-oranges comparison because Eric Hillman was focused on survival by any means necessary, and FitLife Brands is attempting to make strategic business decisions that support and optimize long-term growth. Despite that, MusclePharm revenue on Amazon is growing MoM, with platform subscriber growth continuing to be strong. And what might be helping that of late is the return of MusclePharm Combat protein bars that were relaunched in April. But I’m fearing that FitLife Brands might be getting excited about early indicators of sales performance, getting overly-confident, and might be getting caught up in the last (and biggest) part of that old MusclePharm sales playbook. And CEO Dayton Judd even had to take jabs last quarter's comments I made about “launching more and more products” before then in the same breath going mentioning FitLife Brands was exploring the product format “no-no zone” I talked about with RTD beverages...whether that's an energy drink or protein shake. But I'll breakdown all the strategic elements within the recent FitLife Brands announcement...including how it impacts projected margins and how that relates to FitLife Brands future supplement industry M&A strategy overall.

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Most successful CPG products do not arrive out of nowhere; they’re remixes of existing ones. While most remixed CPG product innovations have “easy to understand lineages,” Pop-Tarts (and its lesser-known competitor) wouldn’t fit that description. See…the food technology advancement that packaged those fruit-filled pastries in Mylar wrappers and made them shelf-stable was remixed from a 1961 product launch called Gaines-Burgers. Well…if we didn’t love dogs enough…you’re about to learn about another reason. And you probably didn’t pick up on it from the name, but Gaines-Burgers was the very first shelf-stable soft food for dogs. Three years later, Post Holdings’ product engineers applied similar technology to preserving food for human consumption. Yet, a product launch fumble by Post allowed for hated rival Kellogg’s to commercialize its portable breakfast “Fruit Scones” first…which was quickly renamed as Pop-Tarts to honor the pop-art movement dominating the decade.

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If you get too close to the sun, you will burn. This is the recent story of Premier Protein. BellRing Brands (NYSE: BRBR) is a portfolio that owns a collection of convenient nutrition brands like Premier Protein and Dymatize Nutrition, which was previously wholly-owned by Post Holdings. A fast-paced and busy lifestyle is pushing consumers to switch to quick and healthy meal options. This has resulted in above average categorical growth rates and increased household penetration of RTD protein shakes that promote active lifestyles. Additionally, powders are becoming more mainstream, and category proliferation has created an environment where more consumers are purchasing both every day and performance nutrition positioned protein products at grocery stores and mass retailers. Bellring Brands had a strong 2024 Q2 with net sales reaching $494.6 million, which was up 28.3% YoY. Premier Protein (~85% of BellRing Brands total revenue) grew 33.8% YoY, which came from large volume increases. Dymatize Nutrition was up 4.6% YoY, stemming from volume and price increases. Moreover, I provide three deep dives into the functional CPG portfolio's "hero SKU families" of Premier Protein RTD protein shakes and Premier Protein and Dymatize protein powders. As I’ve detailed in the past, Premier Protein has been partnering with the biggest and most reputable players in the industry to make large CAPEX investments…which has now given them a scalable, regionally diverse supply chain that will enable many years of robust growth. And you might be thinking, “what does that have to do with Premier Protein getting too close to the sun and getting burnt?” Well…generally speaking, business growth is a sign of success. However, when supply is still constrained, and demand is greater than expected…you can get yourself in trouble fast. This past quarter, Premier Protein tried to push the boundaries on promotional activity…and continue launching new flavors (that excite the marketplace), all without the needed retailer and internal inventory buffers. Because of that, Premier Protein likely will need to pull back on promotional activity in the second half of its fiscal year. I’d caution them to slow down a bit, rebuild inventory levels (with the production ramp up) and get ready for the 2025 “New Year, New You” period. Why? I think 2025 has an interesting setup brewing within the RTD protein beverages marketplace: (1) I believe there will be A LOT more brand competition within this protein category format (including Dymatize), (2) I believe mass and grocery retailers will start to give RTD protein beverages more placements outside of the typical healthy living/pharmacy space, and (3) all these activities will be blanketed with likely higher protein input costs. So, things should be fun to say the least!

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