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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It has been just over two years since I last created a piece of content focused on Thorne Healthtech, so it’s probably long overdue for an update…especially considering something big just happened! Outside of that August 2021 IPO deep analysis on Thorne Healthtech, the only other YouTube mention of the company was in this year’s annual outlandish supplement industry event prediction content. But if you read the headlines (and remember that prediction), you know that I was mostly correct. Thorne Healthtech was in fact undervalued by the public markets and I was correct that Thorne Healthtech would be acquired in 2023…but I was wrong about the buyer. On August 28, 2023, Thorne Healthtech announced that it entered into a definitive agreement under which L Catterton would acquire all outstanding shares of common stock of Thorne for $10.20 per share in cash. The transaction value of approximately $680 million represents a 94% premium to the unaffected closing share price. Now…shareholders will still need to approve, but Thorne's independent Special Committee and Board of Directors have each unanimously approved the agreement. There’s the press release details, but you guys know just sticking to that basic information isn’t my style. For this content, I want to get into the following items: why is the private equity firm acquiring Thorne…along with an update on the last two years of operational performance, and then what could the future look like together. Overall, I believe L Catterton is a great partner to fuel Thorne's long-term growth aspirations of being a major player within the next era of health…one that will certainly be data-driven and wellness-centric with a guiding focus on preventive care that extends the healthspan of each individual.

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Too often, I see “better for you” or functional CPG brands thinking strategically about customer personas in these clean binary constructs. I get it though…an avid premium kombucha buyer would never have a shopping cart that’s also full of Oreos, hot and ready fried chicken, and cans of fake spray cheese, right? Well…CPG entrepreneurs with that kind of limiting mindset about consumer behavior leave A LOT of opportunities on the playing field. Just because a growing number of consumers are avoiding sugary sodas in favor of health halo beverages, it doesn’t mean they aren’t still indulging in other parts of their diet. In a world that often feels difficult to manage, an indulgent treat provides a moment of pleasure and has grown in acceptance as critically important for emotional well-being.

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Even as food inflation moderates slightly, private-label brands continue to pose an expanding level of competitive threat to functional CPG brands. What? Why would a functional CPG brand be worried about competition risk from private-label products? They are just cheaper basic versions of national brand products anyways, right? While those cheapest copycat focused private-label brands like Great Value at Walmart or Market Pantry at Target are still thriving, those (and many more) would be bucketed into what I consider private-label 1.0. What happened next...was that economic conditions from the Great Recession caused shoppers (especially Millennials) to get even savvier. Because of this, they were more willing to give private-label brands a chance, despite growing up in a family that consistently bought branded CPG products. Retailers took advantage of that and invested heavily into store brands and shifted their private-label product development strategy away from imitation and into creating innovative products of their own. Retailers did not only change the ingredients of the products, but also have started entering very small and sometimes experimental segments. Thus, private label not only helps with better-priced alternatives to common products…but allows a consumer to enter premium, niche categories without compromising their spending. This maturation in everything aspect of private-label products is what I consider private-label 2.0. It seems that in today’s CPG business landscape…the competitive clash between premium-positioned branded CPG products and retailer private-label brands seems to be at an all-time high. But what if I told you things are going to get tougher! We are about to start the private-label 3.0 era, and I have the playbook that every premium CPG brand needs. Private labels will continue adapting to the changing consumer landscape, be it a surge in demand for traditional value-orientated solutions, or requests for something beyond the historical standard. It seems without a doubt at this point that retailers will continue to maneuver within the set of different price-tier solutions…with more premium private label products being developed to enter various niches. So, don’t get caught overlooking those same retailers that are your wholesale customers when doing competitive analysis…because they are equally a threat to your fellow functional food, functional beverage, and supplement brands.

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Serious question…have you ever seen an overweight squirrel? Yeah…me either, and I saw tons of them at Kent State University where the black squirrel is an unofficial mascot. Maybe us humans should be looking at those cute…I wish I had one as a pet, squirrels as our spirit animals for weight management. They do the basics everyday…exercise, sun exposure, and nutritionally dense meals full of acorns. Not interested in that latter part…heck I didn’t even know humans could eat acorns until I discovered a new instant hot breakfast cereal brand Folk Revival that’s using acorn flour. Being that it’s gluten-free, wheat-free, and packed with key nutrients, let’s hope that my black squirrel college friends will have enough to eat if acorn flour takes off in the functional CPG space.

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After a decade of consistent leadership coming to an end soon, will there be major changes ahead for the multibillion-dollar global nutrition company? Glanbia Performance Nutrition is one of two wholly-owned segments of Glanbia plc (LON:GLB), a multi-billion dollar global nutrition company. The brands in the Glanbia Performance Nutrition portfolio include; Optimum Nutrition, BSN, think!, Isopure, Amazing Grass, and SlimFast. I'll use the recent earnings report, earnings call, and associated news to update you on how Glanbia Nutritionals and Glanbia Performance Nutrition is performing against the complex operating environment. Glanbia Performance Nutrition had 2023 H1 revenue of $889 million, which increased 3.4% YoY, but that was a sequential slowdown from Q1. The brand portfolio continued to have strong pricing power in the market (with it being up 10.9%), but volume was down 7.5%. Additionally, I'll dive deeper into Glanbia Performance Nutrition geographical, product format, sales channel, and categorial performance (performance nutrition, healthy lifestyle, and weight management). BTW I’m thinking about the creation of a change.org petition for the Glanbia Performance Nutrition division name to be amended to The Optimum Nutrition Company. This one brand alone now accounts for 60% of the total GPN revenue. In the first half of 2023, Optimum Nutrition had 16.2% growth coming from both pricing and volume gains…and U.S. market consumption growth was 14.3%. Finally, I talk through what it could mean for Glanbia as longtime Group Managing Director, Siobhán Talbot, is retiring and current head of the Glanbia Performance Nutrition division, Hugh McGuire, will take over starting January 1, 2024. Is this a big deal? The short answer is yes! So, what does the next 3-5 years at Glanbia look like? Hugh himself stated the normal boiler plate CEO changeover stuff in statements, but I think Glanbia needs to utilize its strong financial position to make a transformative acquisition. I still think blood is in the water over at THG (aka The Hut Group and MyProtein). That large transaction could be accompanied by a spin off its Glanbia Performance Nutrition division into a standalone company with a dual listing in the United States and Ireland. That’s the kind of legacy creating move that Hugh McGuire likely pitched to the board during the interview process…or at least be something living rent free in his head.

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Have you ever wondered why so many of the largest global supplement companies utilize a multilevel marketing strategy? Is it just that effective or is there something deeper at play? I can’t be the only supplement industry professional that’s ever wondered why an MLM brand like Herbalife sells more supplements in 90 days than a massive brand like Optimum Nutrition can throughout an entire year. Or that an MLM brand like USANA Health Sciences sells a billion dollars of supplements annually. Or that MLM brands like Shaklee, Shakeology, and Isagenix each sell hundreds of millions in supplements annually and rank in the top 25 biggest companies in the space that aren’t owned by a CPG conglomerate. And then finally I can’t forget about the largest MLM company in the world by revenue…Amway. But to explain the outsized impact Amway plays on all this MLM & the supplement industry stuff, I need to go back several decades before the company was founded when vitamin ingredients switched from being extracted from food to synthesized in a lab. During that same timeframe in the mid-1930s, Carl Rehnborg founds the California Vitamin Company…which is generally recognized as introducing the first multivitamin/multimineral supplement sold in the United States. In 1939, the name of California Vitamin Company is changed to one that might be much more familiar to the consumers today…Nutrilite. While Carl Rehnborg might hold a special place in the supplement industry history, he actually had a much larger impact on the multilevel marketing space. That’s because in 1945…he invented the form of direct selling that is now called multilevel marketing. Nutrilite devised an approach whereby distributors purchased products at a thirty-five percent discount and then played the dual role of retailing products to non-distributor consumers while also recruiting new distributors in a pyramid-type incentive structure. But while Nutrilite might have started the deep connection between supplements and MLM, the Direct selling Association notes that today’s largest single “direct sales” product category is wellness. This category of products (which includes supplements), represent 35.6% of total sales in the Network Marketing sales channel…and wellness is the fastest growing category of all. Furthermore, I'll explore a few other historical linkages between multilevel marketing and the supplement industry...including why women and Mormons in the State of Utah are important to this story.

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