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TSG Consumer Partners Takes Minority Stake in Nuun

Brad Avery

Private equity firm TSG Consumer Partners has acquired a minority stake in Nuun, a Seattle-based brand of hydration tablets and powders, for an undisclosed sum.

Nuun president and CEO Kevin Rutherford told BevNET Wednesday the strategic partnership comes in the midst of the company’s five-year plan for growth and at a time when it is seeking to scale. He said the new capital will help Nuun maintain control over production and innovation by allowing the company to work more closely with its co-packers.

“We were in a really fortunate position that there was a lot of interest in Nuun, so raising the actual dollars was not the biggest challenge,” Rutherford said. “I think the bigger opportunity was where was the value add that we could bring forth to drive the growth. So we were really looking for a strategic partner, not just an investment in the company.”

“We have been impressed by Nuun’s momentum since its inception and its commitment to clean-ingredient, low-sugar products,” said TSG managing director Michael Layman in a press release. “We look forward to helping the company educate the public on healthy hydration and wellness, grow into additional customer segments and expand its innovative electrolyte, vitamin and performance offerings beyond Nuun’s competitive athlete core customer.”

Nuun has spent the past year revamping its product portfolio. Last spring the company replaced it All Day line with Nuun Vitamins, prompting sales of the segment to double. Nuun also added the powdered Nuun Performance line, which the company expects to likewise double in business next year. The company reformulated its core hydrating energy tablet line last year as well.

The product tweaks have come as Nuun is expanding into conventional retailers including Target, Public, and Kroger’s. However, Rutherford said the brand’s primary focus is to continue cultivating strong relationships with its current partners in the sports and natural channel. He said he expects the TSG partnership will give Nuun more leverage with some larger retailers and online, where it will expand its digital marketing efforts.

Rutherford also noted the investment will also help offset any seasonal dip in sales during the winter months. As a sports drink company, most of Nuun’s sales happen between April and September. With TSG, the company will be able to begin Q1 of 2018 with enough to cash flow to ensure higher inventory levels at the beginning of the fiscal year, allowing it to continue growing without holding back stock until Spring.

“As we keep growing cash flow continues to be a challenge at the very beginning of our fiscal year,” he said. “Seasonality is a big driver of that, so with a cash infusion it allows us to service our customers with better customer service and healthier inventory levels out of the gate so we’re not holding back.”

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