Dive Brief:
- Keurig Dr Pepper is buying a 30% stake in Nutrabolt, the maker of energy drinks such as C4 Energy and Xtend Energy, for $863 million, the companies said in a statement. The transaction is expected to close this month.
- As part of the deal, Keurig Dr Pepper and Nutrabolt entered into a long-term sales and distribution agreement. Keurig Dr Pepper has the opportunity to earn additional equity tied to in-market execution, and it will have representation on the Nutrabolt board.
- While Keurig Dr Pepper is best known for its two namesake liquids, the Texas-based firm has been actively purchasing stakes in a diverse range of beverage upstarts, or acquiring brands outright, to better position its portfolio to changing consumer trends.
Dive Insight:
As consumer preferences change, Keurig Dr Pepper has moved quickly to make sure it doesn’t get left behind.
The beverage giant has purchased brands such as premium water make Core Nutrition and caffeinated sparkling water brand Limitless.
A key part of Keurig Dr Pepper’s strategy has been purchasing small equity stakes in other beverage companies. Last month, the company purchased a minority stake in Athletic Brewing through a $50 million investment in the nonalcoholic craft beer maker. Keurig Dr Pepper, which is no stranger to the energy drink category, also has invested in A Shoc and owns Venom Energy.
In some cases, Keurig Dr Pepper has not been shy about buying brands it has taken an initial stake in or worked closely with for several years. In addition to Core, its predecessor purchased enhanced water maker Bai Brands for $1.7 billion in 2017.
In purchasing a stake in Nutrabolt, Keurig Dr Pepper gets access to a company valued at about $3 billion and is expected to post sales in 2023 topping $650 million. The transaction also provides the beverage giant opportunities to increase its ownership in Nutrabolt, such as during future efforts to raise capital.
Once the deal closes, Keurig Dr Pepper will be the largest investor in Nutrabolt behind its founder and CEO Doss Cunningham.
“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,” Bob Gamgort, CEO at Keurig Dr Pepper, said in a statement.
Keurig Dr Pepper will sell and distribute C4 Energy in the majority of its company-owned direct store distribution territories, the company said. 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.
For Nutrabolt, the deal will immediately increase the household penetration and distribution for its C4 Energy brand, giving it a valuable backer in the ultra-competitive and fast-growing energy drink category. “ This strategic partnership will supercharge C4 Energy’s current growth trajectory,” Cunningham added.
PepsiCo and Coca-Cola already have prominent positions in energy drinks. Coca-Cola purchased a 16.7% stake in Monster in 2015 and agreed to distribute its energy drinks in the U.S. PepsiCo snapped up Rockstar for nearly $4 billion in 2020, and invested $550 million to take an 8.5% stake in energy drink maker Celsius Holdings in August.
