BURLINGTON, MASS. — Keurig Dr Pepper Inc. is paying $863 million for an approximately 30% ownership stake in active nutrition company Nutrabolt, owner of C4 Energy, C4 Pre-Workout and XTEND brands. The companies also have entered into a long-term sales and distribution agreement.
Following the equity investment, expected to close by year-end, Keurig Dr Pepper will become the largest investor in Nutrabolt behind its founder, chairman and chief executive officer Doss Cunningham. Nutrabolt is expected to achieve more than $650 million in net sales next year. Keurig Dr Pepper will have the opportunity to earn additional equity tied to in-market execution and will gain board representation. The partnership provides rights to further increase its ownership under various capital raising scenarios.
Under terms of the sales and distribution agreement, Keurig Dr Pepper will sell and distribute the C4 Energy drink in the vast majority of its company-owned direct-store distribution territories. Nutrabolt will continue to distribute C4 Energy directly or through its existing network to the specialty, health club and fitness channels and will maintain existing partnerships with beverage distributors in certain markets. The transition of C4 Energy distribution will occur next year and will have limited impact on Keurig Dr Pepper’s financial results until the following year.
“This partnership represents a win-win transaction between our two companies,” said Bob Gamgort, who recently reassumed leadership of Keurig Dr Pepper. “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. We believe that bringing together the resources, talent and expertise of both companies will accelerate innovation and growth and drive significant value creation over time.”
Founded in 2002, Austin, Texas-based Nutrabolt currently distributes its products in more than 150 countries through its direct-to-consumer platforms, Amazon and other third-party e-commerce marketplaces. The products also are available in retailers nationwide, including Walmart, Target, 7-Eleven, Walgreens, Kroger and others.
“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,” Mr. Cunningham said. “This strategic partnership will supercharge C4 Energy’s current growth trajectory by accelerating household penetration, enhancing distribution and strengthening our overall commercial capabilities. We will also be partnering with a talented and ambitious leadership team who shares our values, our competitive spirit and has a similar philosophy of disciplined growth and maximizing overall value creation.
“Over the past 20 years, Nutrabolt has grown from a bootstrap startup to become one of the fastest growing global active health and wellness companies in the world. 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.”
The transaction marks the largest minority investment in the energy drink category in six years, according to Jefferies Group, lead financial adviser to Nutrabolt. All three major national soft drink makers are now meaningfully invested in the energy drink market. The Coca-Cola Co. in 2014 acquired a 16.7% stake in Monster Beverage Co. for approximately $2.15 billion. Earlier this year, PepsiCo, Inc. acquired an 8.5% ownership stake in Celsius Holdings, Inc., Boca Raton, Fla., for $550 million. In 2020, PepsiCo acquired Rockstar Energy Beverages for $3.85 billion. That same year PepsiCo entered into an agreement with Vital Pharmaceuticals Inc., Weston, Fla., the maker of the Bang Energy drink portfolio, to distribute the beverages in the United States. That agreement later turned acrimonious and led Vital Pharmaceuticals to sue PepsiCo to terminate the agreement.
Keurig Dr Pepper has been actively investing in small, specialty beverage brands, recently snagging aminority stake in near-beer maker Athletic Brewing, acquiring the global rights tonon-alcoholic brand Atypique, and participating in a funding round for performance energy drink startupA SHOC Beverage LLC. Additionally, the company this year entered into apartnership with Red Bullto sell and distribute its products in Mexico.