Did you know that the specialty supplement retailer GNC had a venture investing platform? This is broadly known as corporate venture capital. It’s essentially a practice where a large corporate entity takes an equity stake in a small but innovative or specialist company with the objective of gaining a specific competitive advantage. As an alternative to traditional acquisitions, companies are making more of these minority investments. In fact, corporate venture capital now accounts for nearly a quarter of all venture capital investing and its deal value have increased more than tenfold over the past decade. When most people familiar with corporate venture capital think about the concept, they tend to beeline towards large tech companies, but this type of investing is done by every sector in the economy. That includes retailers, especially those that have the financial wherewithal. These retailer-owned (or affiliated) venture funds and/or incubators formed by retailers is becoming more common as retailers are having to evolve more rapidly to meet the needs of customers. I'll run through some recent retailer venture fund announcements and explain the different main forms, which includes improving customer experience capabilities and supporting smaller consumer brands (sometimes to further a cause). Finally, I breakdown GNC Ventures, which has made three investments in the last year (RealEats, GLAXON, and PlantFuel)...and explain what could be next for the retailer's renewed strategic focus on innovation.

GNC "Store of the Future"

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The haters are coming out of the woodwork after the PepsiCo and Celsius Holdings deal, but can’t we all be collegial and appreciate just how impressive its growth story has been? Celsius Holdings (NASDAQ: CELH) hit another record quarterly revenue ($154 million - up 137% YoY) and represented its 16th consecutive quarter of sequential growth for the energy drinks brand. While Celsius energy drinks saw massive growth in convenience stores, mass retailers like Walmart, the club channel, and the Amazon marketplace...the big news this quarter was the announced distribution and investment agreement between PepsiCo and Celsius Holdings. Celsius energy drinks were again biggest brand driver of growth to the energy drink category. Add in the PepsiCo deal, and a lot of competitors have gotten chirpy about Celsius Holdings. The category is growing immensely with no signs of stopping anytime soon, as more consumers get over preconceived notions that energy drinks are sugar-filled devil beverages. What Celsius Holdings needs to do is tune out the noise…both the good and the bad and focus on this PepsiCo transition. Celsius needs to build inventory to fill the PepsiCo system. It also needs to over-communicate to all stakeholders from old DSD partners to PepsiCo team members to internal Celsius employees from corporate to the field.  This is its biggest near-term risk and opportunity.

PepsiCo & Celsius Holdings Deal | Energy Drinks Market Potential Impacts

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Did Netflix just create an ‘in real life” entertainment CPG go-to-market playbook? While I appreciated the expansiveness, sharper storylines, amazing cinematography, and darker nature of Season 4 like most other fans of Stranger Things, the CPG industry strategist in me couldn’t help but notice something else…Surfer Boy Pizza. This was a fake pizza restaurant chain that had a reoccurring theme throughout Season 4, but did you know that you could actually buy a real Surfer Boy Pizza at Walmart? The “in real life” Surfer Boy Pizza was just as much of a masterpiece as Stranger Things Season 4. It used to be pretty rare to find real products in movies, but over the last century product placement has become such a big business. This has caused media companies to have an overreliance on product placement and Netflix is showing the entertainment industry that its lack of creativity and utilization of fictional brands might be a big mistake. I breakdown why Netflix changed its consumer products strategy and what's likely next for them in their battle with Disney. What Netflix did with Surfer Boy Pizza was special, but this sort of reverse product placement, aka going from entertainment placement to CPG and not CPG placed in entertainment, isn’t completely new (Willy Wonka and the Chocolate Factory). That being said, life has a way of imitating art, especially when there’s money to be made. So, in the final part of this content, I run through five of my favorite fictionalized CPG brands from movies that could have made a killing (maybe even literally) crossing over into real life.

CC: Limitless, Coming to America, Anchorman, Fight Club, and The Stuff

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Will Dymatize have enough power remaining in its growth story to make up for some predicted Premier Protein headwinds from a product recall? As I normally do with my performance update content of publicly-traded functional CPG brands, I will use the recently filled earnings report, earnings conference call, and any relevant publicly disclosed news, in this case it’s Bellring Brands (NYSE: BRBR) 2022 Q3 earnings release, to obviously update you on the performance of brands in that portfolio, but also use it as the backdrop to discuss market insights within the active nutrition formats of the liquids, powders, and bars. BellRing Brands 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 the increased household penetration of RTD protein shakes that promote active lifestyles. Bellring Brands had a strong 2022 Q3 with net sales reaching $370.6 million, which was up 8.2% YoY. Premier Protein (81% of BellRing Brands total revenue) grew 7.3% YoY because it was able to exercise pricing power because of its strong brand equity in the inflationary market. Dymatize Nutrition was up 16.8% YoY stemming from price increases. Finally, I provide some details around the Premier Protein voluntary product recall from its contract manufacturer Lyons-Magnus and explain if I think it will cause any long-term issues to the company's reputation and the reputation of the product in question.

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The Vitamin Shoppe is on pace to have it's highest topline revenue in the company's history. Yet, I would guess that most still haven’t fully grasped the results of massive multi-year turnaround plan at The Vitamin Shoppe. I know I probably sound like a broken record at this point, but it’s time to wake up people. Since The Vitamin Shoppe is shielded in the public markets by the Franchise Group ownership, the supplement retailer’s turnaround hasn’t been front and center, but overlooking it would be a mistake.  Fact is, 2022 continues to set up very nicely for The Vitamin Shoppe. They will have store growth for the first time in half a decade, they have a growing customer file for the first time in half a decade, and they are positioned inside of a growing specialty category that has been recession resistant in the past. This particular episode updates you on the recent business performance for The Vitamin Shoppe. I'll utilize the 2022 Q2 Franchise Group (NASDAQ: FRG) earnings report and conference call to provide quarterly segment-level financial details for The Vitamin Shoppe. I will also dig deeper into several areas of The Vitamin Shoppe, such as franchising activity, merchandising additions (Ladder), creation of a corporate holiday, and two potentially important strategic partnerships with college campus retail operator Follett Higher Education Group and personalized fitness company FlexIt. Finally, I update you on the bid to acquire Kohl's by the Franchise Group.

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It was just announced that PepsiCo (NASDAQ: PEP) entered into a long-term agreement to be the preferred global distribution partner for Celsius Holdings (NASDAQ: CELH). PepsiCo will also make a net cash investment of $550 million in exchange for 8.5% ownership of Celsius Holdings. With the Bang Energy deal coming to an abrupt end in June 2022, PepsiCo couldn’t risk falling behind in one of the fastest growing mature beverage categories. So, what does the PepsiCo and Celsius Holdings deal mean to the broader energy drinks market? This was the deal to make for PepsiCo, as Celsius Holdings is about two to three times bigger from a revenue perspective compared to C4 Energy or Alani Nu. This was also the most disruptive option for the energy drinks market because Celsius Holdings had 300+ unique DSD partners. Most of these were added in the last two years and will create a déjà vu moment for these independent DSD partners that will again be forced to replace another massive energy drink brand on their trucks. Which energy drink brands will benefit from the market chaos? Outside of Celsius Holdings, beneficiaries will be Bang Energy, C4 Energy, and Alani Nu. Additionally, next-tier energy drink brands like G Fuel, Kill Cliff, LifeAid Beverage, and even the newly launched energy drink from the supplement industry powerhouse 1st Phorm will get some benefit from the DSD reshuffling. But arguably the biggest indirect winner of the PepsiCo and Celsius Holdings deal is GHOST Energy.

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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! My guest on this episode is a fellow Austintown Fitch High School alumnus that just happens to also be a beverage industry superstar. Chris Hunter shares how that Youngstown, OH upbringing shaped his brand building process that’s spanned categorical opposites from Four Loko alcoholic beverages to now Koia plant-based healthy beverages. We also talk about our personal and professional evolutions that went from reckless to precautionary in a few short years. Finally, Chris shares business strategy lessons from his almost two decades in the beverage industry that’s a DO NOT MISS for any current or aspiring beverage entrepreneur. These are just some of the fascinating areas we chatted about in this episode...

Chris Hunter LinkedIn

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The fitness world has always been fast-changing, but did the life-altering last two plus years create additional opportunities for supplement (sports nutrition) brands to focus on endurance activity participants? Maybe we all want to wipe this from our memories, but it wasn’t too long ago that gyms across the country were closed, bikes (both traditional and stationary exercise ones) were sold out everywhere and going for a run was one of the few legally approved ways to leave your home. While these disrupted fitness routines didn’t last forever, they did create a sticky enough imprint that has started to produce some profound contagion effects. So, what am I taking about? Are people running more, cycling more, swimming more, and hiking/walking more now? Yes. For supplement brand owners (especially those positioned in the sports nutrition niche), your next step is assessing if this potential leading indicator of long-term change justifies a strategic action. That’s because chasing every single trend (even an extremely tempting one) is not the answer, especially when it doesn’t align with your current brand strategy or upcoming rebrand. But, let’s assume that taking advantage of the trending endurance opportunity does make sense for your sports nutrition brand. I’m going to rundown a few key areas that must be considered; (1) how will you support these endurance activity participants (2) how will you overcome sales channel challenges (3) which is the best product development approach. More than ever, humans are beginning to realize that movement is an essential component in quality of life. In my opinion, endurance sports (regardless of the level), continue to grow as the fitness/wellness link strengthens. Sports nutrition brands will have to recognize that the market is less concerned about increased performance and more about health, longevity, immunity. Is your sports nutrition brand willing to look past the challenges caused by this market evolution and see its massive opportunities?

This content was supported by NuLiv Science. If you’re interested in obtaining more information around why brands are formulating with NuLiv Science ingredients to take their products to the next level, head over to https://nulivscience.com/ or reach out to me directly and I’ll connect you with the relevant team member.

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Amazon’s private-label business started in 2005 with bedding offerings under the Pinzon brand name. It then expanded into consumer electronics products and eventually other categories under Amazon Basics. It now encompasses everything from vitamins and coffee to clothing and furniture under the veil of more than 1000 brands at this point that could be over half a million SKUs. At just face value, that’s a shit load of private label brands and products. In comparison, Target has about 50 private label brands...with Good & Gather being it’s largest SKU count at more than 2000. Similarly, Walmart has about 320 private label brands and about 30,000 SKUs. So, hearing that Amazon has started to drastically reduce the number of items it sells under its own brands is probably a sound business decision. This is a huge contrast from a few years ago when Jeff Bezos gave the private label team a goal to reach 10% of Amazon sales by 2022. At the time of stating that, Amazon reported its house brands only account for about 1% of its retail sales. This is likely the main motivation behind the huge proliferation of private label items. Over the past six months though, Amazon's new leadership instructed its private label team to slash the list of items and not to reorder many of them with discussions reaching the point where a reduction in assortment could be well over half. Heck, it has even been rumored Amazon had conversations about completely exiting the private-label business. So, why is Amazon now willing to throw billions in annual revenue away by deprioritizing private labels? But, shifting this back towards the supplement industry (and brands)…what does this all mean (if anything)?

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Grubhub and Amazon recently announced they had entered into a strategic partnership. As a part of the deal, Amazon Prime members in the United States have the ability to get Grubhub Plus for an entire year free. That means somewhere around 150 million American households that reportedly have an Amazon Prime membership can use Grubhub without delivery fees in more than 4,000 U.S. cities. That’s fairly massive news if you ask me. Why? I'll explain why why each party entered into this strategic partnership. Furthermore, I'll assume this strategic partnership goes well between Amazon and Grubhub to the point that Amazon exercises warrants to reach 15 percent ownership and then begins considering the acquisition of the entire Grubhub asset. I'll breakdown the reasons Amazon would be interested in that idea. I don’t like to throw around the disruptive word willy nilly, but there’s a lot to get excited about for Amazon if things positively work out.

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