Can we all agree that Liquid Death is the king of the CPG industry when it comes to brand collaborations? It’s newest LTO merch offering solves a major golf etiquette problem…especially for those that “had one too many” Liquid Death and believe golf courses are essentially just massive public bathrooms. Now…instead of always running to the woods to pee, golfers can whizz right on the course in front of everyone. To make this public urination dream become a reality, Liquid Death partnered with not only Bad Birdie (one of the most disruptive golf apparel brands), but also one of the first entrepreneurs/inventors to get a deal on the first season of Shark Tank. And if you were wondering, The Uro Club is essentially a urinal for golfers, disguised as a golf club.

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On the Monday before the Christmas holiday, USANA Health Sciences (which if you didn’t know is a U.S. public company trading on the NYSE under the stock ticker USNA) announced its acquisition of an almost 79% controlling ownership stake in Hiya Health for a $205 million cash transaction…with contract features providing acquisition of the remaining equity at a pre-negotiated valuation scale. For the last twelve months ended September 30, 2024, Hiya Health generated net sales of $103 million and adjusted EBITDA of $22 million. That implies a transaction value of approximately 2.5x trailing twelve months revenue or almost 12x adjusted EBITDA…both of which are mostly in line with recent M&A transactions across the VMS industry. And though other founders love to obsess over those comparative metrics, regardless of where they landed, I’d imagine this is an amazing financial outcome for a company that was only founded four years ago…and raised in total a measly half-million dollars. But why would a multilevel marketing supplement company, that generates more than 80 percent of its annual revenue within the Asia Pacific region, acquire a direct-to-consumer (DTC) children’s supplement brand focused on the U.S. market? And my latest first principles thinking content will explain the strategic rationale behind this M&A transaction including how the multilevel marketing business model appears to be falling flat for some companies after years of public scrutiny, regulatory pressures, and changing consumer tastes. Also, I'll examine several other value accretive investment opportunities that USANA has pursued to advance its long-term growth strategy. In December 2020, USANA made a strategic investment in the protein bar brand manufacturer Built Brands. Beyond receiving a minority equity stake (in a growing company), Built Brands’ expertise was leveraged to accelerate the development, enhancement, and expansion USANA nutrition bars that were to be manufactured in its new foods plant. And then in November 2022, USANA acquired the protein bar brand Rise Bar. Additionally, in that same announcement…USANA acquired an emerging direct selling company (called Oola) that leverages a personal development framework to sell “mind and body” supplements. But for these companies dropping multilevel marketing…it’s always important to remember that “grass isn’t always greener on the other side.” But with the form of direct selling invented 80 years ago by Carl Rehnborg now becoming a tainted term of sorts today…I’d expect more of these MLM companies to add diversified layers of growth. Yet don’t get it twisted…these moves are mostly targeted at slightly camouflaging the primary business model just long enough until multilevel marketing can be reframed (and transformed) into something more attractive to younger digitally native generations.

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Comparing Poppi and Olipop is like comparing a college sorority girl and a biochemistry lab nerd. So, why does it seem surprising to most beverage industry pundits that consumers aren’t worried about recent claims disputing Poppi’s good-for-your-gut reputation? In the two months since Poppi was hit by a widely publicized class action lawsuit, retail sales numbers continue to crush harder than I am now after seeing Poppi co-founder Allison Ellsworth kill that dance. I’m joking guys…happily married, but what’s not so funny is how these product claims lawsuits have become almost like a “rite of passage” for any functional CPG category that “crossing the chasm” towards majority adoption. My advice for entrepreneurs…focus on building a bold strategic narrative over emphasizing product features (and associated health claims) ASAP, because it will undoubtedly lower your legal risk.

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Several years ago, I explored three strategic paths of extending into nutritional supplements that would be available to major lifestyle brands predominantly known for athletic apparel. And those were obviously entering the supplement category through acquisition, internal brand development, or creating a strategic partnership. But since that original content was released, several large athletic apparel brands have indeed decided to extend into nutritional supplements...and by leveraging each of those three strategic paths. The first example was ALO Yoga that internally developed its three SKU Stackable Wellness System that launched in August 2023. Next, an example of entering the supplement category through M&A happened in January 2024 when NOBULL acquired Tom Brady’s wellness company TB12. Finally, the recent Reebok Nutrition announcement officially provided me with that final strategic path...with the multibillion-dollar global brand (now owned by Authentic Brand Group) deciding to enter the ingestible CPG world through maybe the least risky (and definitely most comfortable) manner of leveraging a licensing partnership. And I state that because ABG knows licensing extremely well…as it’s the world’s largest sports and entertainment licensing company. So, who’s the strategic partner ABG chose for Reebok Nutrition? That would be Generation Joy, which is admittedly not a company I had ever heard of prior to this Reebok Nutrition announcement. From a quick search, it seems Generation Joy was founded in 2016 by certified holistic health coach Joy Harari. The first (or at least the most commercially successful) creation from Generation Joy is a nutricosmetic cosmeceutical mashup brand leveraging marine collagen called Shore Magic. But more importantly, my latest first principles thinking content will explore (1) why did Reebok decide now is the time to enter the sports nutrition market and (2) what could impact the probability that Reebok Nutrition will be successful?

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It was once famously said that “life can only be understood backwards; but it must be lived forwards.” And that is certainly true regarding how the “Great Shutdown” era impacted American society. But while much of that story is still being written several years later…we can be quite confident that the way people approach their personal health (and wellness) will never quite be the same again. As an example, occasion-based vitamins and supplements thrived as consumers invested in certain condition-specific products seen as more beneficial when battling against “Great Shutdown” paradigm shifts. And arguably the most prominent activity that year involved immune health…with the Nutrition Business Journal reporting a retail sales spike of over 70% YoY in 2020, as “cold, flu, and immunity” supplements experienced something like $2 billion in additional categorical demand. But after that skyrocketing commercial activity, the “cold, flu, and immunity” VMS category has experienced several years straight of consistent mid-single-digits YoY retail sales decline. Additionally, household penetration for immunity-related VMS products have dropped by over five percentage points since 2020. So then…should we assume that immune health is no longer a high priority for consumers? Not exactly…as it seems even despite that decline in commercial activity, various consumer surveys throughout 2024 have noted immune health remains an important motivating factor for supplement use. Moreover, survey findings show that a quarter of U.S. consumers are increasing their use of supplements to boost immunity…with approximately 1 in 6 regularly taking an immune health supplement. So, what’s going on within the immunity-related CPG space? Are the last several years of negative categorical growth indicative of its outlook? Or is the future ripe with market opportunities? My latest first principles thinking content will explore those questions by first examining a few underlying drivers of demand like around the implications of consumers understanding that immunity needs are multidimensional and making it a constant year-long health condition pursuit...along with how “fear” influenced the purchasing of immunity-related CPG products in 2020. And since we’re talking about consumer packaged goods…I'll briefly explaining where I see the “product” opportunities emerging within the “immune health” space. Also, I'll detail an often-overlooked strategic element when it comes to the immunity-related CPG market, that too many companies focus on the dry product benefits when the opportunity is really in emotive storytelling that makes offerings more relatable and tangible.

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Yogurt! Yogurt! I hate Yogurt! Even with strawberries. Maybe Rick Moranis doesn’t like yogurt because he also has the technology to blow up and then shrink people…but for the more than 37 million Americans with type 2 diabetes, yogurt consumption could be on the rise. That’s because the FDA just announced it will allow the first ever qualified health claim for yogurt…recognizing that three servings per week may reduce the risk of type 2 diabetes. Diabetes is a top 10 cause of death in America…which is partly why GLP-1 medications, that can help manage the disease, have become so popular. But even if those GLP-1 users are more concerned with weight loss, 42% of new yogurt launches “high in protein” claims…which has become a key nutrient gap that will need to be filled in the “Age of Ozempic.”

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About a year ago, Campbell Soup Company CEO Mark Clouse made that statement during a keynote presentation to student leaders saying, "I like to seek out experiences that challenge me. I like to do things that make me a little uncomfortable and that put me in positions where I was learning…where I was trying something that I might not have been great at.” And he’s right…as putting yourself in positions where you're a little uncomfortable (but where you can learn and develop as you move forward) is an essential part of what sets leaders apart. No matter what stage of your career, you must have that thirst to keep learning…looking for more inspiration, more knowledge, more mastery. And while some enhance their knowledge and skills through reading, listening to podcasts, or learning from mentors…Mark Clouse prefers a different more challenging method. Last week, Mark Clouse decided to leave The Campbell’s Company (where he served as President and CEO since 2019) to become team President of the Washington Commanders. So, in essence…one day Mark Clouse is overseeing a $13 billion CPG brand portfolio, and the next he will be leading all facets of my lifelong favorite NFL team’s business operations. Because even if Mark Clouse had an extremely impressive almost three-decade journey climbing the ranks of a highly competitive multitrillion-dollar industry…major U.S. pro sports organizations hiring a team president from the corporate world in general is a very rare occurrence. How does this even happen, right? It doesn’t matter that Mark Clouse has no experience in professional sports…the team owner Josh Harris believes that being an accomplished business builder with a proven track record to strengthen both the organizations he leads and the communities he serves will translate successfully. But there is something that I believe is worth mentioning here…because while admiring (respecting) professional accomplishments (or personality traits) can happen from a distance in today’s connected world, it’s even more noticeable up close and personal. In that same keynote, Mark Clouse shared a story from early in his CPG career at Kraft Foods where he made a commitment to his future self…stating that he would be all in (showing up ready to play) regardless of what he was doing in life. And my assumption is that the leadership team at Harris Blitzer Sports & Entertainment saw Mark Clouse consistently show up in that “all-in” manner when they were negotiating a unique marketing partnership with The Campbell’s Company that was announced about 1.5 months prior. This leadership pivot happened at the intersection of my passions for CPG and sports (aka the right place), but it also happened at maybe the right time. I wholeheartedly believe that the more you learn, the more you realize that there’s still so much more to learn. And while I’ve continued to be passionately curious everyday…I’ve unintentionally put limitations to my learning. With the world changing rapidly today…I believe your ability to learn new things and adapt to new circumstances is more important than ever. So, while I’m not saying that I’ll be professionally pivoting to such a degree like Mark Clouse (that is unless he needs a right-hand man) haha…his decision did inspire (and challenge) me to rediscover aspects of my lifelong learning quest that I know will provide me with an even greater fulfillment.

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Vital Proteins was hardly the first supplement brand to utilize collagen peptides, but it has become a category creator that disrupted the entire protein space. And while most will focus on the brand’s leading share in the collagen market across every U.S. sales channel, I want to talk sustainability at Vital Proteins. For those unaware, collagen peptides are an upcycled byproduct of the meat industry…but Vital Proteins has additional responsible sourcing standards and traceability guidelines. Additionally, Vital Proteins removed 25 million plastic scoops from circulation and aims to be 100% scoopless by the end of this year. And then recently, it was announced that a blue paperboard tub…that uses 90% less plastic than the brand’s traditional tub, will be used for its top-selling Unflavored Collagen product available at Sam’s Club stores nationwide.

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Is the future of convenient nutrition centered around human fuel? Bombarded with tons of complicated information about what they should and shouldn’t eat/drink, busy health-conscious consumers are searching for nutrition simplicity. In fact, U.S. and UK consumers are spending (on average) half as much time preparing food as the previous generation…which is increasing interest (and demand) for high-protein convenient nutrition products. And this makes sense…especially when you consider that protein has become a kind of "holy water" that instantly anoints any food or beverage with a health halo. While the focus on high protein diets started in those shadowy niches of sports nutrition and weight management, there’s now increasingly diverse consumer cohorts that possess a heightened awareness around the value of this essential macronutrient. So, fitness enthusiasts, health-conscious individuals, and consumers simply looking for a convenient/filling/nutritious meal (or snack), each are focused on getting the right amount of protein based on their activity level, fitness goals, and individual characteristics. And it’s that demographic diversity, being interested in protein for different reasons, that's making it a battleground category as high-protein claims proliferate across the entire grocery store. But while that market expansion can be great…it also means the “one-size-fits-all” targeted consumer strategic marketing (and product) approach has become obsolete. Yet…to the credit of HUEL, they’ve continued to show this almost sixth sense ability to evolve (whether that’s through sales channel expansion, product innovation, or marketing communications), appealing to an increasingly wider range of healthy lifestyle consumers with varied protein needs throughout the day. And this is an underlying reason why I believe HUEL will continue growing global market share…as the brand has begun showing its ability to appeal to a broad range of convenient nutrition consumer need states. While I believe it primarily competes in the everyday nutrition need state, HUEL also has developed brand equity and appealing product value propositions to sports nutrition, adult nutrition, and weight management consumers. But speaking of weight management, “food fit for the future” will also need to understand what role it plays within the “Age of Ozempic.” We’re likely entering into a golden age of therapeutics. So, what happens when more effective biologics targeted towards weight loss get approved? The second order effects will usher in a whole new era of CPG industry winners and losers. The good news is that the core HUEL “complete food” meal products have flipped the historical messaging around meal replacements from this negative “restriction diet” focus into this positive, proactive convenient food focus. That reframing strategy seems so simple, but Atkins, Slim Fast, Weight Watchers, and others haven’t been able to pull it off yet. That makes it likely that HUEL has already positioned itself on the right side of the “friend or foe” GLP-1 weight loss drug threat. And then for this final section of the content, I'll quickly readdress the HUEL exit event optionality “elephant in the room” because A LOT has changed since those initial reports first surfaced in late-2021 that HUEL could be exploring an IPO.

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Though it certainly wouldn’t go down as the biggest acquisition, totally overlooking last week’s PROMIX Nutrition deal will prove detrimental for any founder building within the supplement industry. In 2011, Albert Matheny founded PROMIX after being unable to find products that matched his standards for ingredient quality, science-backed performance, and product safety. PROMIX lives by the simple mantra “no artificial anything.” To control the product (and ingredient) quality, PROMIX develops its formulas in-house, controls its own supply chain (with 94% of ingredients sourced from North America), and independent lab testing on finished products is available transparently online. Moreover, PROMIX made a packaging update several years ago that eliminated 97% of the plastic…becoming one of the earliest supplement brands to pioneer paperboard packaging. And that bold strategic narrative of “simplicity is the ultimate form of sophistication” was a fundamental reason why PROMIX was just acquired. But if you haven’t noticed over the last probably year, there have been A LOT of Big CPG portfolio architecture shifts. And these actions have mostly centered around deploying a “growth by subtraction” M&A strategic approach that seeks to create a more streamlined, focused company. But for those Big CPG portfolios that already had clarity on “competitive strengths,” you are seeing prioritization of acquisitions that can (1) fit focused parameters but (2) move the needle from a revenue perspective. And if we’re talking Big CPG…that means “deal size” preference recently have been billion dollars (or more). So, with Big CPG currently M&A “whale hunting,” why would Paine Schwartz (the largest private equity firm dedicated to sustainable food chain investing) acquire a “smaller supplement brand?” Over the last decade, the performance nutrition segment of the supplement industry has undergone an enormous shift in marketplace dynamics. Imagine this huge pot that's melding together macro shifts in demand drivers and trending supplement industry dimensions like format/occasion expansion, brand strategy, consumer segmentation, and/or ingredients/benefits. The result has been this overall mainstreaming effect that disseminated the supplement subcategories across the entire retail landscape. Yet, it's that intense market expansion that has caused chaos...and opportunities for those that can put together this new puzzle. After Big CPG streamlines (and focuses) their portfolios around competitive strengths, the next logical step should be towards investing in smaller growth brands that have strategic alignment. Though this won’t happen overnight, even if mega nutrition trends like “Age of Ozempic,” the protein-ification of grocery, “Make America Healthy Again,” and gut wellness…are driving Big CPG crazy modeling out every strategic if/then gameplan right now. But that’s fine if you’re Paine Schwartz…because selecting PROMIX means the private equity firm already built conviction around “what/who they believe will win” within that shifting marketplace. Paine Schwartz sees PROMIX as that important puzzle piece. And now it must prioritize deliberate depth over breadth actions that create an even more distinct strategic narrative to fully take advantage of this opportunity…which is a lesson any founder building within the supplement industry should apply to their own business.

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