'Win-win': Keurig Dr Pepper and Nutrabolt announce strategic partnership

09-Dec-2022 - Last updated on 09-Dec-2022 at 17:12 GMT

Image courtesy of Nutrabolt

Keurig Dr Pepper Inc. has invested $863 million in Nutrabolt, giving the beverage giant an ownership stake of approximately 30% in the high growth sports nutrition company.

In addition, KDP and Nutrabolt have agreed long-term sales and distribution arrangement that leverages KDP's go-to-market capabilities.

Under the long-term sales and distribution agreement, KDP will sell and distribute C4 Energy in the vast majority of KDP's company-owned direct store distribution territories, which is expected to meaningfully increase retail availability and household penetration for the brand.

Nutrabolt’s portfolio of brands includes C4 Energy, a performance energy drink brand, C4 Pre-Workout, a leading pre-workout brand, and XTEND, the top post-workout recovery brand in the US.

According to a press release, Nutrabolt will continue to distribute C4 Energy directly or through its existing distribution network to the specialty, health club and fitness channels and will continue to work with some of its existing beverage distributors in certain markets.

A win-win

Commenting on the announcement, KDP Chairman and CEO Bob Gamgort stated, "This partnership represents a win-win transaction between our two companies. KDP gains significant presence in the rapidly growing performance energy drink market and Nutrabolt gains access to a strategic investor with extensive sales and distribution capabilities to further accelerate its growth.”

By taking an approximately 30% ownership stake, KDP will become the largest investor in Nutrabolt behind its founder, chairman and CEO, Doss Cunningham.

Cunningham said: "We are extremely proud of this business and the team members who built it from the ground up and, with the assets and experience that KDP brings to the table, we are more confident than ever about the direction of the company and our vision for the future.

“This strategic partnership will supercharge C4 Energy's current growth trajectory by accelerating household penetration, enhancing distribution and strengthening our overall commercial capabilities.

"This is an amazing moment for our company, and it is because of the incredible contributions of our team members, commercial partners and those who have financially backed us over the years, namely MidOcean Partners, and CPG veterans and equity investors Brian Goldberg and Clayton Christopher."

“Energy everything”

Commenting on the news, Joshua Schall from J. Schall Consulting told us that the product in the Nutrabolt portfolio that KDP is most interested in is the C4 Energy beverages. “These were launched in April 2018. Those first few years were laying the groundwork and foundation for the success of 2020, 2021, and 2022. C4 Energy has now become one of the fastest-growing performance energy drink brands in the U.S. market,” he said.

“In the last 52 weeks, C4 Energy has done about $300 million in sales. In comparison, the existing energy drink portfolio of KDP has done less than $50 million. That’s the easiest contextual point I can make that shows just how important this C4 Energy deal is for KDP.

“Beyond that short-term obvious beneficiary stuff, KDP also knows the importance of owning more of the “energy everything” occasion.

“I’ve mentioned this concept of “energy everything” a few times, but just to recap it’s basically the simplification of the consumer interest in caffeine. That can come in the form of coffee at home, coffee away from home, RTD coffee, energy drinks, and energy powders. These all compete at the end of the day with a consumer’s interest for consuming caffeine to get a boost of energy,” said Schall.

Details

The transition of C4 Energy distribution to KDP will occur during 2023, which is expected to be a transition and investment year, with limited impact on KDP financial results until 2024, when KDP expects the strategic partnership to become accretive to its financial results, according to the release.

Advisors on the deal for KDP included Evercore Group LLC, Skadden, Arps, Slate and Meagher & Flom LLP.

Jefferies LLC and Goldman Sachs & Co LLC served as financial advisors to Nutrabolt with Goodwin Procter LLP, Giannuzzi Lewendon LLP and Kirkland & Ellis LLP serving as legal advisors.