It has been over six months since my last MusclePharm bankruptcy update, but don’t misinterpret that silence as somehow indicating the court proceedings must have been good vibes only. If you followed my Bang Energy bankruptcy content, you know that process took around 260 days. But it was complex, involving creditor claims in the billion-dollar range…and had that infamous hostile takeover element to it! Surprisingly enough…the MusclePharm bankruptcy has taken even longer, though with far less in creditor claims. Why? Well…that likely could be pointed in the direction of the previous largest shareholder, CEO, and Chairman of MusclePharm, Ryan Dexler. Even though almost all secured and unsecured creditors agreed on the proposed path forward for liquidating the remaining assets and value of MusclePharm, Ryan Dexler took various legal actions against Empery Asset Management. And this is understandably so…as Ryan Dexler put many millions of his own capital into MusclePharm over the years. But within the Empery collateralized loan that got MusclePharm in this mess, there was a clause within the signed intercreditor/insubordination agreement that disallows Ryan Drexler the ability to file legal challenges. So, after the courts enforcement of that Empery document, and the its approval of the asset purchase and sale agreement for MusclePharm this past week...we might have a new strategic acquiror of the legacy sports nutrition brand. While there’s still some details that need to be worked out before you see this information spread across the press release news wires, the strategic commentary in the latter part of this content will assume the “stalking horse bid” with FitLife Brands, Inc. (NASDAQ: FTLF) works out. Moreover, I'll update you on the recent evolution within the brand portfolio and how that triggered a much needed sales channel diversification at FitLife Brands. Finally, I'll run through how Eric Hillman performed (in terms of financial metrics) over the last 10 months as MusclePharm CEO.

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They say that “imitation is the sincerest form of flattery,” but I’m not sure this one passed the vibe check. When my creative director Grant Furness showed me the twitter jokes circulating around in late-May about Swift Lifestyle, I thought can you imagine the conversation that brand owner had with his design agency…or most likely the international freelancer on Fivver. It’s like “Hey Bro! I want my sports nutrition brand to look like GHOST Lifestyle…you know one of the most recognizable companies in the industry that I’m about to compete in. Yeah…just literally copy it, but to make it more swifty by tossing in an aggressive looking bunny rabbit…maybe just use one that looks like another sport nutrition brand called Sneak.” Which if you really think about that decision…it’s very meta IYKYK.

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MyProtein is in the early stages of rolling out a global rebrand, but is it impactful enough to make the future clearer for the THG Nutrition division? On September 14, 2023, THG (aka the company formerly known as The Hut Group) updated the public markets by releasing its 2023 first half 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 2023 first-half, divisional revenue for THG Nutrition was approximately $423 million, which was up only 2.6% YoY. Why is that 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 four major things going on here at MyProtein, which its ecommerce sales channel strategy, integration of vertical integration acquisitions, pricing strategy in an inflationary environment, and trickle down impacts from poor performance in other THG segments. Additionally, I'll talk through the positives and negatives surrounding the global rebrand of MyProtein. Finally, I run through some “what could be next” type scenarios for THG Nutrition that includes acquisition offers and a possible spin off into its own publicly traded entity.

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In my Biosteel content from July 6, titled "BioSteel Sales Misstatements & SEC Investigation | Canopy Growth Next Steps with Sports Drink", I knew major decisions would need to be made for brand survival, but I completely overlooked the probability of a BioSteel bankruptcy…mostly because Canopy Growth CEO said he still had “great confidence” in the sports drink brand. But on September 14, 2023, Canopy Growth announced that in an effort to simplify its business and reduce cash burn, it had ceased funding the Biosteel business unit. Moreover, the sports drink brand would seek bankruptcy protection under the “Companies' Creditors Arrangement Act” in the Ontario (Canada) Superior Court to conduct a court-supervised sale process for its business and property for the benefit of its stakeholders. Why would Canopy Growth opt for a court-supervised sale process of a growing beverage brand instead of just finding a potential buyer itself? Surprise! It was just disclosed that Canopy Growth had hired Goldman Sachs to find a buyer for Biosteel or at least attract an additional investment dating back to late 2022. So, despite Goldman Sachs engaging with two dozen potential buyers, the process returned no actionable bids. Throughout 2023, Canopy Growth has been in full-blown business transformation mode…seeking cost reduction actions to increase profitability and reduce overall debt position. Canopy Growth is now seeking to be centrally “focused and positioned for North American cannabis sector leadership utilizing an asset-light strategy.” So, as you could guess we have a square peg and a round hole situation now. Biosteel isn’t focused on cannabis, and it acquired a manufacturing facility not even a year ago…so it’s also no longer asset light. But earlier…I also referenced another “external” development over the last 90ish days that could have influenced this business decision. Earlier this month, the U.S. Department of Health and Human Services (HHS) recommended to the DEA that marijuana be reclassified. Additionally, President Joe Biden recently asked his administration to review how cannabis is classified under the Controlled Substances Act. So, is this the “light at the end of the tunnel” or another false start for the U.S. cannabis industry? Canopy Growth getting rid of Biosteel makes us understand which side of the coin one of the industry powerhouses is betting on. Finally, I'll end this content by talking through what’s next for Biosteel…and who could potentially end up with the sports drink asset.

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Even Edward Bernays would be impressed with whoever is behind the onslaught of propaganda against PRIME. First, several school districts in countries like Australia, Canada, and UK issue parental warnings or straight up ban the drinks. Plus, Canada supposedly recalled PRIME…even though the beverage brand doesn’t distribute into the country yet. And you might think crazy international folks, but even American Karens are urging the legislative branch to put pressure on the FDA. But shout out to Senate Majority Leader Chuck Schumer’s speech writer for throwing in some fire quotes like “one of the summer’s hottest status symbols for kids is not an outfit, or a toy—it’s a beverage.” Again, the origin of making PRIME public enemy number one is unknown, but PRIME needs a two rules of functional CPG refresher…consumers are dumb, and hedging against that reality is essential.

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Pivotal is an interview-style segment that tackles topics in consumer packaged goods (CPG) and fast moving consumer goods (FMCG) from the business leaders that live it EVERY DAY! For the past several months, you’ve probably noticed that branded beverage cooler over my shoulder. I call it my “get shit done” cooler because it’s stocked with mostly C4 Smart Energy drinks but also a variety of other functional beverages that contain the brain energy ingredient Cognizin. Whether it’s signals from growth in social listening data or successful brand partnerships landed recently, there’s a lot of momentum building for Cognizin. So, I figured why not catch up with Gerard Adams, who has been leading the Kyowa Hakko USA segment of Kirin Holdings for the last 18 months. In our conversation, we cover everything from the Japan Brewing Company’s 100+ year evolution to how that beverage experience (and the pharmaceutical division that grew from it) greatly benefits it’s “health science” ambitions. Gerard and I also chat through how Kyowa Hakko’s ingredient positioning and aggressive growth plans are intersecting perfectly with Kirin Holdings’ expansion into more functional CPG brand acquisitions…especially when you consider how everything integrates with greater consumer benefits and aligns with the company’s “Creating Shared Value” initiatives. But these are just some of the fascinating topics we chatted about in this episode...

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I’m going to let you in on a not so little secret within the supplement industry. Supplement brands are competing for every dollar from consumers who have a heightened sensitivity to costs, but the supplement consumer has proved once again that it’s highly resilient. And while the level of investment funding and quantity of M&A transactions are down this year (compared to the previous few years), things have fared relatively well for the supplement industry. The markets are rightsizing, lofty valuations are getting washed out of the system, and companies are getting used to higher interest rates. Combine that with the significant capital now sidelined on the private equity side and stockpiles of cash at strategics waiting for deployment…and I believe things could be improving on the finance deal side of the supplement industry in the near-term future. Does that mean everything is heading right back to the dozen or so years of Goldilocks between the Great Recession and the Great Shutdown? No…investors have gotten more careful, and there’s less FOMO. Money isn’t free anymore…and I don’t believe it will get significantly cheaper anytime soon as the Federal Reserve will face challenges stemming from wage inflation battles within the labor movement 2.0. So, investors must recalibrate, but deals will indeed keep getting done. Though I believe the supplement industry investment theme over the next few years will be coined “getting back to the basics!” And that phrase can obviously mean many different things to many different people, but I’m thinking about it through a synergistic lens. Let’s look at a trio of supplement industry deals that were announced in the last few weeks: Nutra Holdings acquired Nested Naturals, Thorne HealthTech was acquired by the global private equity firm L Catterton, and the final recent “back to the basics” synergistic supplement industry deal I wanted to bring to your attention is between OBVI and the coffee brand Coffee Over Cardio. But instead of me just babbling on about this M&A transaction, I asked my good friend Ronak Shah (Co-Founder and CEO of OBVI) to join me for a quick chat on camera. In that conversation, we run though the backstory on how the deal materialized, the investment thesis, and what’s next on the deal horizon for OBVI.

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CPG brands must understand how quickly and dramatically they can be dragged into cultural battles that impact the bottom line. Does that mean CPG brands should deemphasize purpose-driven moves around identity and culture? It depends…mostly predicated on what I like to call The Rule of Nike. Because the fact is that most consumers want CPG brands to serve their basic needs by understanding what they care most about, not try to win at every flavor of the week’s cultural moment. But in those cases where “what consumers care most about” is aligned with the core values of a CPG brand, you stand strong in your belief…even if it means sacrificing everything because that’s a very real possibility in today’s CPG industry…where substitutes are plentiful and switching costs for consumers are low.

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Pivotal is an interview-style segment that tackles topics in consumer packaged goods (CPG) and fast moving consumer goods (FMCG) from the business leaders that live it EVERY DAY! If I asked you to make a list of the fastest-growing supplement brands of the 2020s, I’d consider you downright silly if you didn’t include the name Bloom. Excuse the punny joke, but if you weren’t aware…business is absolutely “bloom’in” at the supplement brand that Greg Lavecchia (Bloom CEO & Co-Founder) created with his wife and fitness influencer Mari Llewellyn. In our conversation, Greg and I cover everything from Bloom’s "overnight success" and how the power of an audience-first CPG strategy propelled the early days to how 2020 changed everything for the company...in a good way. We also deep dive into Bloom’s exceptional strategic alignment between its digital marketing playbook, sales channel strategy, and its Greens & Superfoods product. But these are just some of the fascinating topics we spoke in our conversation together...

Thank you to Synergy Flavors for supporting this Pivotal episode.

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If I was a writer at one of those big clickbait paywalled media companies, this content’s title might read “AI unveils Satan’s new energy drink!” To decode that a bit, and no I didn’t make this energy drink name up, but Europe-based HELL Energy recently decided to let advanced AI systems craft every aspect of its newest product offering. AI started by formulating the perfect (and complaint) performance energy drink. It then digitized three flavor variations, tasted them, and utilized predictive intelligence to select the winning mix of Tutti-frutti & Berry-Blast. Finally, AI used the latest industry trends and sales data to design all packaging elements and various marketing efforts. But while most publicly disclosed AI usage by the largest CPG brands has been well…gimmicky, I can tell you from experience that the disruptive technology is being utilized in very meaningful ways under the hood.

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