CPG Week: KDP Snags Ghost & Olipop Plays Ball

[00:00:05] Monica Watrous: Welcome to the CPG Week podcast by BevNET and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, Managing Editor of Nosh, here with my co-hosts, Brad Avery and Lukas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we're discussing Keurig Dr's ghost story. Ollipop's sports strategy and Whole Foods Market top trends. But first, Campbell's is launching a limited edition candle collection inspired by seasonal side dishes like apple, fennel, herb stuffing, everything bagel seasoned mashed potatoes, jalapeno, cheddar mac and cheese, and of course, the classic green bean casserole. How do you guys feel about your house smelling like Thanksgiving side dishes?

[00:00:56] Brad Avery: No, thanks. I mean, I don't I don't mean to be the curmudgeon all the time. I feel like I am.

[00:01:01] Lukas Southard: But no, thank you. I don't know. I'm excited about Campbell's candles. I just feel like that's been there out in the open for the taking for so long. Hey, why didn't they think to do this sooner? It's it's it just rolls off the tongue. I'm also I don't know if this is controversial opinion or not. I'm anti green bean casserole. I just don't like it.

[00:01:24] Brad Avery: You're not, that's not controversial. I'm with you on that. I think it's a, I think it's a wasted side dish. I don't think it belongs on anyone's Thanksgiving table.

[00:01:32] Monica Watrous: So what is the best Thanksgiving side dish, Lucas?

[00:01:35] Brad Avery: Um, well, I'm a stuffing guy and I make my mom's famous stuffing and that, and everyone seems to like it, but I, stuffing with gravy on top.

[00:01:45] Monica Watrous: Well, this episode drops on Halloween. And speaking of ghost stories, BevNET covered the $1 billion acquisition of Ghost by Keurig Dr. Brad, can you tell us more about that deal?

[00:01:59] Lukas Southard: This was a surprise. Not so much that a energy drink had a big exit. It was more that Ghost was sold to KDP, given that they've had a longstanding relationship with Anheuser-Busch and that KDP has a pre-existing relationship with C4, another lifestyle energy drink brand. So this was a nearly billion dollar deal, $990 million for an initial 60% stake in Ghost with the remaining 40% to be acquired by 2028. And the deal is expected to finalize in late 2024 or early next year. Co-founders Dan Lourenco and Ryan Hughes are staying on with Ghost and will operate as part of KDP's US Refreshment Beverages segment. Meanwhile, Anheuser-Busch is in the process of separating from Ghost, and we can imagine that a lot of this acquisition will be going towards buying out distributors and transitioning Ghost into the KDP distribution network. As I alluded to earlier, KDP, a couple years ago, invested $868 million into Nutrabolt, the parent company of C4, for a 30% minority stake in that company. So we know that KDP has been talking for a while about wanting to become more of an energy drink competitor, much as we saw Pepsi a few years ago, initially with Bang and then Rockstar and their portfolio with Celsius. Now, KDP seems to be moving into this space as well. And now they have two very high growth brands in this emerging fitness energy space.

[00:03:33] Brad Avery: Yeah, as you were saying, Brad, part of the strategy seems to be creating what they call a multifaceted energy platform. And not only do they have the C4 and they've now Ghost, assuming it goes through, but they also just recently started distributing Black Rifle Coffee, who announced they're going to be getting into the energy business. They also do some distribution for Bloom, which has released their own RTD kind of female focused fitness energy drink. So they are really kind of building out a suite of energy. Brands that all kind of hit on different places and although c4 would have been I guess the most obvious acquisition for KDP Ghost doesn't necessarily Compete in the exact same spaces that c4 does they're both energy drinks. They both use a lot of these kind of sugary candy flavors like we've talks about in the past but ghost is you know kind of positioned with the gaming crowd and with the more of like on-premise music venues and stuff like that, whereas C4 is definitely more of that performance, fitness-oriented, gym culture kind of energy drinks.

[00:04:44] Monica Watrous: Ghost also has a pretty significant business in the sports nutrition and performance category. And this acquisition will really give KDP some legs there where it's not currently playing.

[00:04:56] Lukas Southard: Well, I think that's what's so interesting about the choice of brand is that there is a lot of similarities between Ghost and C4 because C4 Nutrabolt also has a big supplements section. And we also see, as you alluded to, Lucas, both of these brands are at the forefront of the licensed flavor deals. You know, they both do a lot of candy. C4 has Skittles and Starburst and just expanded with Hershey's licenses. And Ghost really was helping pioneer that with Swedish Fish and Warheads flavors. So I'm curious how these two brands together in a portfolio play out. And there is the big question of what does this mean for the future for C4 and their relationship with KDP? And it's also interesting to consider that the $990 million acquisition price for all of Ghost over time is just $100 million or so more than the $868 million that KDP paid C4 for a third of the company, for a minority stake. So whether KDP will one day move to acquire all of C4 or not, it's definitely going to command a higher valuation.

[00:06:07] Brad Avery: Yeah, and it could be just that C4 or Nutribold was not ready to sell and thought that there was still some room to grow. I think one of the things that we will be tracking is kind of how this will work out in terms of distribution and distribution resets. As you said earlier, Anheuser-Busch was the distributor for Ghost Energy, and Now that they won't be, and those will be on KDP trucks, it does open up some room for some of these other energy brands that we've been tracking who might find their way into a bigger distribution network. I mean, we've talks about Lucky Energy in the past. I know Rise Fuel has been talks about. This is still a pretty big category full of a lot of emerging brands that would love to have Anheuser-Busch as their distribution partner.

[00:06:55] Lukas Southard: One last thing that we'll want to be keeping track of is that this is now, in short succession, another nearly billion-dollar acquisition by a major CPG strategic, PepsiCo and Siete Foods, just a few weeks ago. We are seeing these mainstay CPG giants start flexing their M&A again, which is exciting. But also, is this just a couple of one-offs or is this the start of a larger trend of some M&A activity picking back up?

[00:07:27] Monica Watrous: It's a great question, Brad, and we'll certainly be following any deals that transpire in the wake of these two mega acquisitions. In other beverage news, Lucas, you wrote about Olipop's sports sponsorship strategy on BevNET. Can you tell us more about what's going on with that brand?

[00:07:45] Brad Avery: I wrote a story called Game On inside Ollipop's burgeoning sports sponsorship strategy. It's something that's been slowly bubbling for about a year now with Ollipop, pun intended. Ollipop started getting in the door with sports partnerships with their first one, which was with National Women's Soccer League team, the Kansas City Current.

[00:08:09] Monica Watrous: Woo, KC baby.

[00:08:11] Brad Avery: So Olipop signed on with The Current before The Current moved into their new stadium and was the sponsor of the team, but they didn't actually have rights to sell their beverages at the stadium that The Current was playing in, which was the MLS teams. But now The Kansas City Current moved into their own stadium, and it's the first dedicated female soccer stadium in the world. and Olipop is being sold there. So it was a big deal and that basically opened the door for a bunch of other deals for the Oakland-based prebiotic soft drink maker. Had to throw in Oakland there. Go Oakland. So they are now also partnered with the WNBA's New York Liberty, who just won a championship. They are partnered with the LA Clippers and the new Intuit Dome, as well as a MLS team, the FC Cincinnati. And along with the Liberty deal. They also got into the Barclays Center, which means that they're being sold at Brooklyn Nets games as well. So over the course of about a year, they've lined up some really big deals in a lot of different sports and a lot of big and medium-sized and emerging sports. They're also aligned with eSports team FlyQuest as well as NASCAR's Legacy Motor Club and sports fitness organization United Grid League. They've really leaned into this idea of becoming aligned with professional sports and with the on-premise opportunity for soft drinks. It's important to note that they are not really replacing in a lot of these deals, any of the big strategics like Coca-Cola or Pepsi. They're usually being sold alongside of Coke or Pepsi in these arenas. They're either the official functional beverage of the team or the official prebiotic drink of the team. And this allows them to be offered and to get some of the advertising and activations that come with those sponsorship deals while also not really having to compete directly with Coca-Cola or replace Coca-Cola or Pepsi in these venues. Now what's interesting is this week their competitor, Poppy, also announced that they had landed a new sponsorship at the Los Angeles Lakers stadium. So now in LA, we've got the battle of the prebiotic beverages kind of coming to a head with the two NBA basketball teams.

[00:10:45] Monica Watrous: It's a really interesting channel that I had never considered for emerging and better for you products. You think about sports watching, sports spectating, and I just imagine a lot of traditional brands like Pepsi and Mountain Dew and Coca-Cola. And so I think it's an interesting bet that these brands are placing on the consumer who goes to professional sports games.

[00:11:13] Brad Avery: Yeah, I mean, one of the main things that I thought was interesting is that they are targeting some of these emerging sports. So the WNBA is a huge opportunity because it is, especially this past year with Kaitlin Clark and with the New York Liberty, as I said, they really kind of became the next major sport for a lot of people to watch who weren't watching professional women's basketball until then, myself included. I watched a couple of games and I never really watched before then. So these are opportunities to get in early with some of these teams. and line up sponsorships that are multi-year, sometimes three, five years, eight years long, and get in when it's on the rise. And three years from now, the target consumer or the consumer base of people watching an NBA game is gonna be huge. And with the Liberty, they lined up that deal right as the Liberty was starting the playoff run. Now, they had just won the championship, and so there's gonna be a lot of eyes on that team next year, and Olipop will have a lot of those eyes on their brand.

[00:12:12] Lukas Southard: Well, we've also seen other brands in different categories start making bigger pushes into this space as well. In sports drinks, we saw BioSteel as the official NHL sports drink. We've seen some energy drinks like Goat Fuel and other startups making Headway. Barcode is another brand. So in the CSD space, why not start moving in? I think about, you know, this season there's ads for Sprite with Anthony Edwards and a lot of these legacy brands that you don't necessarily consider to be, you know, athletic performance beverages, but nevertheless, you know, strike these deals. So it's about time, it almost seems, for these next-gen CSDs to be striking these types of partnerships.

[00:13:01] Brad Avery: One thing that I learned about while reporting this, and there was actually a bit of a campaign going into the Summer Olympics to, there was a petition that went around that was called like, get big soda out of the Olympics or something because Coca-Cola has held the sponsorship of the Olympics for like 40 years or 50 years or maybe even longer. And there was a lot of pushback that this is not a healthy beverage, that the Olympics should be putting their name behind. Granted, Coca-Cola invests a lot of money to keep that sponsorship, but there is somewhat of a turning of the tide where it seems like, you know, the consumer trends for a better for you soda are starting to trickle down into these partnerships. And these brands, these are franchises, these are businesses, these teams, and they're like, hey, Our consumers want something that's maybe a little bit better for you than what the strategics are offering. We can do those partnerships and really represent something, a new age of these beverages in our stadiums and arenas.

[00:14:04] Monica Watrous: Speaking of food and beverage trends, Whole Foods Market released its annual forecast recently, and we covered the list. Here are some of the highlights. They are calling out international snacking, such as popcorn or chips with global-inspired flavors, like masala chai popcorn, for example, or a new product that just launched as a collaboration between Daily Crunch and Fly-By-Jing, a Sichuan sprouted cashew mix. Other trends included on the Whole Foods market list include dumplings, stepped up sourdough, which I believe is a carryover from the sourdough craze of the pandemic, crunchy textures, and I think that refers to condiments like chili crisp, and a continued prominence of plant-based aquatic ingredients such as algae-based oils and seaweed snacks. and protein powering up in different applications. Also beverage trends such as heightened hydration and tea innovation.

[00:15:03] Brad Avery: What I loved about this, and I don't always follow these different trends that we get at the end of the year, beginning of the year, but I did see that a brand that I particularly love and reported on, who's local to those of us here in Massachusetts, Jaju Pierogi were Part of the dumpling call-out, which I thought was interesting not just because I like the brand I think they do some good products But also that this kind of idea that dumplings can be not just a traditional Asian type of dumpling but that there is a dumpling for most cultures out there and the pierogi is something that I've always loved and I I didn't think I ever got enough love. So way to go, Jiaxu. And, you know, I think it's cool that the Whole Foods market forecast was including multiple types of dumplings.

[00:15:51] Monica Watrous: Insiders can read more about Whole Foods Trend Forecast on BevNET and Nosh. And a quick shout out before we wrap up for the day. We learned recently that the founders of Dash Drinks, Jack and Alex, are big fans of CPG Week. And we are just glowing to know that there are folks globally who take in this podcast. So thanks to Jack and Alex for sharing your kind words with Mike and the rest of the Taste Radio team when they were visiting the UK recently. And

[00:16:26] Brad Avery: Oi, oi, oi, right? Is that what we do in England?

[00:16:30] Monica Watrous: Yeah, I think that's how it works.

[00:16:31] Brad Avery: I lived in England for a year, but no.

[00:16:33] Monica Watrous: Oh, I didn't know that about you.

[00:16:35] Brad Avery: You know, semester abroad, well year abroad, I guess for me.

[00:16:39] Monica Watrous: Here are some other notable bits of news from the week. Getting That Dough, 7 Mile Brands invests $3 million in drum roll snacks, Wonderlands is creating somewareness with nut mixes, and Tripp teams with Calm on co-branded Mindful Blend drink. For these stories and more, become an insider at BevNET and Nosh. That wraps up this edition of CPG Week by BevNET and Nosh. Thank you to our audio engineer, Joshua Pratt, our director is Mike Schneider, and our designer is Aaron Willette. If you enjoyed the podcast, please subscribe on your listening platform of choice, and we will see you next time.