Hold up, wait a minute! Isn’t there a Newtonian law or something that says quarterly revenue can only go higher with Celsius energy drinks? Celsius Holdings (NASDAQ: CELH) had quarterly revenue of $265.7 million, which was down 31% YoY. Believe it or not…the last time Celsius Holdings had negative YoY revenue growth was in the first quarter of 2016 when the energy drink brand was generating around $4 million of quarterly revenue. According to Circana last 13-week data, CELSIUS accounted for 16% of all energy drink category growth YoY in the third quarter of 2024. In addition, Celsius grew market share slightly to 11.8% and is now securely the third-largest energy drink brand in the category. And I don’t want gloss over this accomplishment…because it’s the first time in over a decade that an energy drink not named Red Bull or Monster Energy has had a 10% share in the U.S. market. Celsius energy drinks has seen massive growth in convenience stores, foodservice (e.g. fast food restaurants), mass retailers like Walmart, the club channel in retailers like Costco, and the Amazon marketplace. Additionally, the early international market development groundwork starting to formalize with CELSIUS extending its relationship with Suntory Beverage & Food and also the first major international market expansion under the PepsiCo umbrella (i.e. Canada). It's my opinion that international expansion presents significant opportunity for incremental growth over the next three to five years. With Celsius at basically full distribution now…the TDP growth will have to come from increased items carried per store. Going forward, Celsius will increase items per store through a combination of product strategies like flavor, format, pack size, and variant expansion. Additionally, CELISUS will continue scaling up the new Essentials lineup that has exceeded the company’s expectations. Moreover, they will seek more store placements like leveraging cold display activity in Celsius-branded coolers. While the U.S. energy drinks market has never been bigger than right now, competition within the category has never been greater (with C4 Energy, GHOST, and Alani Nu continuing to push market leaders). Then, you have categorical growth rates slowing and macroeconomic factors pressuring same-store sales of the largest convenience store chains. Finally, I'll breakdown a collection of categorical acquisitions that directly (and indirectly) impacted Celsius Holdings...which includes the recent news that Celsius acquired Big Beverages Contract Manufacturing, Keurig Dr Pepper (KDP) acquiring GHOST, and Molson Coors acquiring ZOA Energy.

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Did a recent human capital move finally signal that Glanbia Performance Nutrition intends to transform into a “functional beverage powerhouse” long-term that I’ve been talking about for the last few years? Glanbia Performance Nutrition is one of two divisions of Glanbia plc (LON:GLB), a multibillion-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 2024 first nine month of 2024 revenue growth of 1.7% YoY. The brand portfolio had volume growth of 3.2%, but that was more than offset by price decline of 4% YoY. Additionally, I'll dive deeper into Glanbia Performance Nutrition geographical and product 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 65% of the total GPN revenue. In first nine months of 2024, Optimum Nutrition had 6.4% YoY growth coming from strong volume gains, but U.S. market retail consumption growth in tracked channels was up 1.1% over the recent 13-week period. Additionally, Optimum Nutrition generated over $1.1 billion in revenue last year...which makes it the number one sports nutrition brand in the world and also the top sports nutrition brand in 18 different countries. Finally, I talk through why I think the recent hiring of GPN Americas President and an announced Glanbia group transformation program sounds like the perfect opportunity to strategically align around GPN becoming a “functional beverage powerhouse” long-term. The RTD beverage format accounts for about 8% of the total GPN revenue…and that basically $150 million in 2024 revenue comes from four main products (across three different GPN brands). Yet, all of the focus will likely be placed on the Optimum Nutrition and ISOPURE protein beverages that have underperformed compared to market leaders like Premier Protein.

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THG Nutrition is currently on a five quarter “losing streak,” but will an upcoming corporate restructuring move change its outlook? THG (aka the company formerly known as The Hut Group) recently updated the public markets by releasing its 2024 Q3 trading statement. 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 2024, divisional revenue for THG Nutrition was approximately $174 million, which was down 10.5% YoY. So, what’s up with these poor growth rates when the overall global supplement market continues to grow? I'll dive into several strategic decisions impacting MyProtein including: its global digital sales channel strategy and retail partnerships in physical retail, and let’s just say A LOT is riding on the success of the MyProtein global rebrand. Early results of the biggest rebrand in the 20-year history of MyProtein is said to be promising with brand awareness, consideration, and perception all demonstrating YoY improvements. More importantly though…THG Nutrition leadership needs to pay close attention to key commercial metrics over the next year because to continue moving upstream in positioning (and unlocking sales channel diversification opportunities within the American market) it needs to ensure this rebranding decision is well received by and generates brand affinity with those less price-sensitive customers. But in the final part of my latest first principles thinking content, I'll breakdown why THG Ingenuity will demerge into a standalone independent private entity. And I’m less concerned about analyzing the recent performance of THG Ingenuity, its expected enterprise value, or how it’s getting funded…instead I’m more interested in how this demerger will directly (and potentially indirectly) impact THG Nutrition. And with THG Ingenuity essentially being the master switch that “powers” THG Nutrition and THG Beauty...neither can survive without the other entity. So, something like a ten-year contract was put into place that reportedly started in 2022. Regardless, the demerger will simplify the organization.

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Franchise Group Inc. just voluntarily filed for Chapter 11 bankruptcy protection, which maybe means something to The Vitamin Shoppe…but probably less than you initially assume. Last week, there were rumblings in the legacy financial media that Franchise Group Inc., the owner of specialty retail brands including The Vitamin Shoppe, was preparing to file for Chapter 11 bankruptcy within the next week. Then, this weekend, I get an email from a PR agency (representing The Vitamin Shoppe) providing me with a nice, pre-packaged quote…likely because The Vitamin Shoppe leadership knew I’d be creating a “what does this news really mean” content for supplement industry professionals (many of which own, lead, or work at vendor brands). About five years ago, The Vitamin Shoppe was in the midst of an aggressive strategic turnaround plan under new CEO…when it was determined that the best go-forward strategy included selling itself to an entity (at the time) known as Liberty Tax for $208 million. After that acquisition, Liberty Tax would change its name to Franchise Group, Inc. and go on to acquire several other franchise businesses. Over the next 3.5 years, it would operate as a publicly traded entity until it was decided in May 2023 that the portfolio would be taken private through a $2.6 billion management buyout. The group that bought Franchise Group was led by then-CEO Brian Kahn…but included a consortium of other investment banks and private equity firms (like B. Riley Financial). But this is where things get a bit messy…because a handful of months later, Brain Kahn (amid a criminal investigation into his role in a securities fraud case tied to the collapse of a defunct hedge fund) stepped down as the CEO. Yet, that’s not the primary reason why Franchise Group just filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code. The actual explanation requires knowledge of the Franchise Group portfolio businesses, recent operational performance, and a bit of economics 101. At the time of the management buyout, Franchise Group owned an assortment of retail assets that obviously included The Vitamin Shoppe, but also Pet Supplies Plus, Buddy’s Home Furnishings, Badcock Furniture, American Freight and Sylvan Learning. And in the last quarter of performance (with that retail brand portfolio), Franchise Group generated $1.1 billion in revenue…but had a net loss from operations of about $108 million. And the economy hasn’t materially improved (or shifted) since that May 2023 management buyout timing…so Franchise Group started shedding troubled assets. But that wasn’t enough…especially as even The Vitamin Shoppe and Pet Supplies Plus underperformed operationally to Franchise Group expectations. So, then when you consider that the Federal Reserve hadn’t started cutting interest rates until just recently…there was just too much debt on the balance sheet, and the business continuity outlook was grim without seeking out bankruptcy protection. But because this bankruptcy lists assets and liabilities each between $1 billion and $10 billion…it will most likely take months to be finalized. So, consider this the first content piece in a series. But based on what we know right now, my latest first principles thinking content will breakdown how this Franchise Group bankruptcy impacts the different stakeholders of The Vitamin Shoppe including employees, customers, vendors, and the corporate entity.

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Who got rich during the Gold Rush? But can the popular business narrative that “more millionaires were created by those who sold mining supplies than the diggers themselves” also apply to the growing functional snack category? Well…it seems the multinational food conglomerate behind iconic snack brands like Oreo and Sour Patch Kids is testing that theory. In exchange for shutting down its startup brand accelerators, Mondelez International has launched SnackFutures Ventures…that will invest in “disruptor” supply-side companies. And this new corporate venture capital arm has already invested in two startups…a cellular agriculture company focusing on cocoa and food technology company that utilizes ultrasonic energy to create minimally processed no-added sugar snacks. By supporting the “picks and shovels” that make functional snacks better, Mondelez International gets early insights into innovation that could result in future competitive advantages.

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In the early portion of my strategic management consulting work, I’d over-empathize the importance (most of the time to myself) around this “framework” or that “systemic approach” when helping CPG companies achieve their goals. Maybe I can chalk that up as just younger me still being way too close to his business school academia mindset or maybe back then I just wasn’t able to “see the forest for the trees.” Because all those spreadsheets filled with data, all those metrics created, and all those strategic plans and recommendations weren’t just words/numbers…but human behavior. And it took me a few years, but I’ve now fully embraced that my business superpower isn’t just that “legacy mechanical strategic thinking” but understanding how evolving human needs drive consumer decisions and how those demand drivers can be connected to key aspects commercially impacting different CPG product categories. But others are just wired differently, understanding early that placing humans at the center of every aspect will make the biggest impact within the CPG industry. That’s why I was super excited to chat with Josh Wand (founder of ForceBrands and General Partner at The Family Fund) because while we share the same first name, we have diverse perspectives that make for great holistic insights. This conversation was really fun, spanning how human-led (and human-centric) CPG companies are the future, how AI is hurting (and helping) CPG brands, and why every leader needs to be looking at human performance beyond basic productivity metrics (and KPIs). We also talked about the transparency paradox that could be creating an under-the-radar downside risk for CPG brands. Finally, we talked about where the biggest impact can come from long-term with CPG-focused venture capital firms. But these are just some of the interesting topics we chatted about in this episode...

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Weave together interesting data, eye-catching visuals, and a traditional story flow, and you have the ingredients for a narrative that finds historical truth and acts as a guide for the actions necessary to improve the future. Or that’s at least what a recent Council of Economic Advisors post distributed by the Biden White House hoped to accomplish ahead on the election cycle. Using CPI and BLS hourly pay data, the report shows hours of work needed to purchase a week’s worth of groceries have fallen back to rates from 2019. This creative data storytelling comes at a critical time, as confidence in President Joe Biden to recommend or do the right thing for the economy is among the lowest Gallup has measured for any president since 2001. And that subpar rating will more than likely have significant electoral implications.

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Didn’t the famous philosopher Christopher Wallace (aka The Notorious B.I.G.) once say, “More Protein Chips…More Supply Problems?” Well…even if he didn’t say that, it has been a notorious problem for the Simply Good Foods leadership team that seems to be on repeat again. In this latest episode, I'll utilize the Q4 2024 Simply Good Foods Company (NASDAQ: SMPL) earnings report, earnings call, and supplemental presentations that were filed on 10/24/2024 as the backdrop to provide broad nutritional snacking market insights. In fiscal Q4 2024, Atkins Nutritionals brand dragged down the overall portfolio performance, as Quest Nutrition beat categorical competitors in tracked channel retail takeaway (up 8.8% YoY). What's at the heart of the Quest Nutrition success? Quest Nutrition is still known for the original Quest Bar. And that means the company needs the bar business to be healthy for any of this innovation risk to make sense. But while Quest bar has positive growth, recent performance is lagging internal expectations a new protein bar innovation should launch in February called Quest Overload. Additionally, Quest Nutrition has proven it's one of the few brands that can successfully extend across multiple product forms...and its customer base expects them to come into an indulgent snacking category and flip it into great tasting (high protein, low sugar) offerings. The snacks segment of Quest Nutrition, which now accounts for almost half of all retail sales, saw retail takeaway growth increase 17%. But if we analyze one layer deeper…the salty side of the Quest snacks segment had quarterly retail takeaway growth of about 34%. Quest chips now represent about 25% of the total Quest Nutrition revenue and provide a substantial share of new users to the brand. I’ve been a broken record when it comes to stating that salty snacks are where the excitement (and focus) should be placed within Quest Nutrition. The size of the total addressable salty snacks market suggests significant and continued upside on this business. Yet, the biggest challenge for Simply Good Foods over the last few years has been overcoming Quest chips supply constraints. And solving for this long-term will be extremely important as Quest Nutrition will bring its larger pack size nationwide at Costco next calendar year. Also, I run through what's causing the weak brand performance at Atkins and explain actions the company is taking to change it…especially against the backdrop of GLP-1 weight loss solutions. In my opinion, you’re going to see weight management brands like Atkins (and others) get repositioned on the right side of GLP-1 second-order effects through both product innovation (e.g. Atkins strong)...but most of the “innovation” will come in the targeted communication marketing strategies. Finally, even though even if only about 81% of days were officially included, OWYN had quarterly retail takeaway growth of 112% YoY. Based on revenue growth models, Simply Good Foods leadership expects OWYN fiscal 2025 net sales to be in the $135 million to $145 million range.

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What do you call someone that always seems to be in the right place at the right time? Is this just serendipity or is that person putting them in a position to take advantage of an opportunity? Since the old Roman empire days…philosophers have been proclaiming that “luck is what happens when preparation meets opportunity.” And I don’t want to sound like I’m stealing the final “luck or hard work” question Guy Raz famously asks guests on his “How I Built This” podcast, but it’s an interesting thought framework for your consideration while listening to the conversation I recently had with my good friend John Herman. And while retracing that dozen-year working relationship would have been more than enough to pack this episode full of insightful conversation…we went way back in time to his apparel industry merchant days. And that’s because…while it seems mismatched in hindsight to his CPG industry experience now, it ended up playing an outsized role even to this day within his newest venture (Bero Brewing). But John and I did talk extensively about the constantly evolving (and maturing) sports nutrition niche of the supplement industry…as he saw it firsthand through his time running the category at the specialty retailer GNC and climbing the executive ranks at Nutrabolt (before and after the launch of the C4 Energy carbonated energy drink that now generates over $650 million in annual retail sales). Finally, we talked about his decision to leave that powerhouse company…and what led him to believe pairing the celebrity packaged goods movement with the nascent non-alcoholic beer market was that next “right place at the right time” moment. But these are just some of the interesting topics we chatted about in this episode...

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