Do you remember in late 2021 when I predicted that the "gummification of the supplement industry" would finally start making its way into the sports nutrition category? Those of us forward-leaning strategists have known forever that some of the biggest growth areas within the sports nutrition industry are likely to come from a widening of traditional definitions, as well as products coming to market in alternative delivery forms. That sounds like a perfect set-up for what’s been going on within the creatine subcategory, right? If you haven’t been paying attention…I’d like to welcome you to the “Creatine Gummies” era! What started in early 2022 with Bear Balanced…has now ballooned into dozens of copycat competitors. This supplement trend has gotten so popular, you even had the largest retailer in the world Walmart recently add CON-CRET creatine gummies to its shelves nationwide.

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From Canopy Growth acquiring a majority stake in BioSteel four years ago…to the rise and fall of the supplement turned sports drink brand, I’ve attempted to contextualize the marketplace data and provide insights into would be valuable to the functional CPG community. But with BioSteel officially emerging from bankruptcy recently with a new owner, I thought it would be important to reconcile some of my “what’s next” predictions from the last piece of content. And who’s better at helping me do that than the new owner himself…Dan Crosby. In our conversation, we cover everything from where the crazy idea initially originated to acquire the bankrupt assets of BioSteel to his first impressions after owning the sports nutrition brand for just over a week. Additionally, we talk about his projected sports marketing strategies (including the NHL deal) and how those will look compared to the last version of BioSteel. Moreover, we explore where the beverage format fits into his strategic gameplan. Plus, sales channel strategies, manufacturing plans, and a whole lot more…this one covers a lot of ground, so I hope you guys are ready for it.

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What’s up guys, it’s your boy Joshy Pooh! OK…OK…that poor attempt at copying Maxx Chewning was not authentic. So, I guess according to the famous Dan Lourenco saying "authenticity is undefeated," I'm taking a loss here. But let’s talk about the recent GHOST x Sour Strips collaboration a bit though. Tons of content out there already on the amazing taste of the products and overall cool factor, which is par for the course with GHOST, but here’s what I loved about the collab…the tactful ability of GHOST Lifestyle to navigate its two existing sour candy licensing partnerships. And I want to stress the word partnership, because without strong, trusting, and dare I say authentic long-standing partnerships with Impact Confections and Mondelez International…the Sour Strips collaboration is just another totally awesome idea that never sees commercialization.

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There has been A LOT of change at the convenient nutrition brand HUEL. But on the other hand, A LOT has stayed the same…which is maybe at the heart as to why HUEL has been so successful. But you might remember that almost exactly two years ago, I made my last piece of dedicated content about HUEL (https://youtu.be/UOiTExb1fk0). In that previous content, I was primarily focused on breaking down the predicted huge discussion that HUEL leadership was internally partaking in…about exit event optionality. Either HUEL would look to go through an IPO process, or it would opt to sell the business likely to a strategy buyer. And this is the same crossroads they are technically still at today. Just to update you on the financial picture at HUEL for fiscal year 2023, the CPG brand generated net revenues of about $233 million...which was a 28% YoY growth from the previous year. HUEL grew active customers by 22% YoY to over 900K and passed the 300 million (what they call “complete food”) meals mark sold in over 80 countries since inception. HUEL also increased its physical retail presence by 51% YoY, and their products are now offered in over 11K store locations. In the last year, HUEL has also expanded its product portfolio by launching its first ever non-protein supplement called HUEL Daily Greens and reimagining the energy drinks market with Huel Daily A-Z Vitamins. Both products are still a smaller part of HUEL’s overall revenue, but they align with the product development innovation strategy that has made the company successful. In the functional CPG industry, most successful products do not arrive out of nowhere; they’re remixes of existing ones. That’s the essence of what the core HUEL “complete food” meal products are…flipping the historical messaging around meal replacements from this negative “restriction diet” focus into this positive, proactive convenient food focus. It seems so simple, but the skill of those like HUEL…who are winning in this category is nothing short of exceptional. According to recent interviews with HUEL leadership, the brand (with healthy margins and manageable sales growth) is in a position of being self-sufficient from funding. That being said, HUEL has long-term investors that would like to get a liquidity event soon. Moreover, HUEL leadership has ambitious long-term goals that could be accelerated with a major investment from a strategic buyer for majority share or a full M&A process…and similar could be said if they chose to go public through an IPO process. Which I guess brings us back full circle to the decision ahead...should HUEL IPO or get acquired by a large strategic buyer. I run through both paths in this content...plus provide my thoughts on two potential buyers: Unilever and Glanbia.

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Is the sports and active nutrition space really the influential epicenter of the CPG world? I’ve made that confident declaration A LOT lately, but I have to be honest…behind closed doors I’m just waiting for someone to call me out one of its massive blind spots (like sustainability). But as Deion Sanders recently said, "you better come get us now because this is the worst we will ever be." While there’s still tons of industry-wide work that needs to be done, I’m inspired by a recent innovative sustainability project by the largest global online sports nutrition brand MyProtein. Faced with the common “out of date stock product disposal” challenge, the company decided to think circularly by combining Myprotein ingredients and upcycled materials to produce a sustainable fish feed pellet. So, if you see Nemo looking fit…you know why!

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I’m not sure if the Canadian bankruptcy courts are just wildly more efficient than in the United States, but we already have a major announcement in the BioSteel court-supervised sale process. For those that haven’t been following my previous content on this business activity…and recognize BioSteel probably from all the prominent sports marketing deals (e.g. NHL sponsorship), you might be wondering why previous owner Canopy Growth didn’t just find a potential buyer itself? It did two separate times in the last year but Canopy Growth still didn’t receive any satisfactory bids for Biosteel...likely because the potential buyers looked under the hood and weren’t able to see a short enough path to profitability. But don’t get it twisted…that doesn’t mean the BioSteel assets were worth nothing. There were interested parties waiting…they just needed the bankruptcy process to essentially erase all the Canopy Growth mistakes, thus making the acquisition opportunity much more attractive. Of those interested parties, BioSteel received eight total bids, but only six of which substantially complied with the terms and were considered qualified. The winner of the BioSteel bankruptcy process was DC Holdings Limited, which does business as Coachwood Group. This Canadian holding company primarily specializes in the nutraceutical, sports nutrition, and health product sectors, but it also has a portfolio of real estate investments. Admittedly, when I saw the deal news…I didn’t recognize the holding company, its Founder/CEO Dan Crosby, or its main brand asset called Canadian Protein. Now…that doesn’t mean anything, as I have blind spots like everyone, especially when you consider Dan Crosby creates a significant amount of entrepreneur content online, Canadian Protein is one of Canada's largest e-commerce supplement brands, its products are also sold in Costco Canada, and it looks to manufacture most (if not all) its own products. While the new ownership hasn't released any public information on the BioSteel turnaround plans yet, I'll breakdown where the likely strategic path. Just to get this out of the way…any thoughts that BioSteel would quickly bounce back to recent revenue levels is absurd. This isn’t a knock-on the new ownership, but how that recent BioSteel revenue was generated matters.BioSteel won’t go back to playing the sports marketing game (at the highest levels) that Gatorade invented/mastered and BodyArmor emulated. Yes, BioSteel got to a level of sales in the Coke/Pepsi dominated beverage category that few brands ever reach, but I’m not even certain packaged RTD beverages will be a core focus of the new company. If so, maybe they make it available exclusively through Costco Canada…as rebuilding out a full-on North American beverage team and strategy seems too risky right now. My guess is that BioSteel will be rolled back to something that looks more familiar to the times before Canopy Growth initially invested in the brand and went all in on sports drinks. So, with Canadian Protein as our guide…BioSteel will likely get a revamped (and streamlined) supplement lineup and it will be mostly sold online.

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G Fuel decided to invite “the suits” into its cool kids’ club. Will this result in a similar FaZe Clan-like collapse or does this turn out differently for G Fuel? If you haven't seen the headlines yet from November 16th, G Fuel announced that it received a significant cash investment from private equity firms Kingswood Capital Management and First Bev. Precise terms of the 8-figure deal were not immediately released, but the deal provides significant growth equity for G Fuel. Alongside the investment, Bryan Crowley, a seasoned CPG executive with previous stops at Casa Azul Spirits and Soylent (just to name a few), will take over as the new CEO of G FUEL. Current leadership members…including Founder Cliff Morgan are said to be continuing leadership roles within G Fuel. Those are the scant press release details (outside of some additional "fluff" quotes from key stakeholders), but you guys know just sticking to that basic information isn’t my style. So, the bulk of this content will focus on the following items: Gamma Labs strategic shift into gamer supplement market, recap and reconciliation of my G Fuel energy drinks predictions from 2019, recap reconciliation of my 2019 predictions, breakdown viability and market attractiveness of “gaming” energy drinks, and what could be next for G Fuel after this strategic investment.

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I think it’s finally time for THG to file the necessary SEC paperwork, so my September 2022 MyProtein prediction can become a reality. THG (aka the company formerly known as The Hut Group) recently updated the public markets by releasing its 2023 Q3 earnings report. I’ll be utilizing that financial information, along with notes I took listening to the earnings conference call, and any relevant publicly disclosed information to obviously update you on the recent performance of THG Nutrition division that includes the world's largest online sports nutrition brand MyProtein, but also utilize everything to provide insights surrounding the global supplement markets. For those unaware, THG is self-described as “a vertically integrated, digital-first consumer brands group, retailing its own brands in beauty and nutrition, plus third-party brands, via its complete digital commerce solution, Ingenuity, to an online and global customer base.” During the third quarter of 2023, divisional revenue for THG Nutrition was approximately $195 million, which was down 2.3% YoY. If we look at THG Nutrition segment revenue for the first 9 months of 2023, it generated about $619 million…which was up 0.4% YoY. Why are these growth rate low? especially if we look out over the last two years (being up only 3.7% in that period)? I'll dive into several things going on here at MyProtein including: its ecommerce sales channel strategy, integration of supply side acquisitions, MyProtein rebrand causing short-term revenue impacts, and pricing strategy in an inflationary environment. Though it only makes up one-third of the total portfolio revenue, THG Nutrition accounts for almost all its profitability. While THG Nutrition isn’t a standalone business, strategy within the segment (over the last two years) has been focused on creating optionality. I predict that sets THG up to spun-off its “nutrition segment” into a standalone public company. This new entity will likely IPO in the U.S. markets because of the more favorable market conditions. Finally, I dive into arguably the top 3 growth drivers that THG Nutrition needs to focus on over this next year to make themselves more attractive to the U.S. investment community.

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I’ve said it once and I’ll say it again…it’s crazy how the number one brand in the entire convenient nutrition category (e.g. Premier Protein) can still have so much untapped organic growth opportunity! BellRing Brands (NYSE: BRBR) is a portfolio that owns a collection of convenient nutrition brands like Premier Protein, Dymatize Nutrition, Powerbar, and Joint Juice, 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. Bellring Brands had a strong Q4 with net sales reaching $472.6 million, which was up 24.6% YoY. Premier Protein (~83% of BellRing Brands total revenue) grew 30.2% YoY, which came from mostly volume increases. Dymatize Nutrition was down just under 1% YoY stemming from a slight volume decrease. Moreover, I provide two deep dives into the functional CPG portfolio's "hero SKU families" of Premier Protein RTD protein shakes and Dymatize protein powders. In this quarter, BellRing Brands leadership decided to discontinue the operations of PowerBar in the North American market, but the company will continue offering the brand internationally. Finally, I explain several different growth opportunities that are untapped at Premier Protein. These include how operational improvements will create more revenue and my predictions that Premier Protein will start to diversify both its highly concentrated domestic sales channel mix (e.g. convenience stores) and geographical revenue mix.

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