Keurig Dr Pepper Inc. (NASDAQ: KDP) is investing $863 million in Nutrabolt, maker of the energy drink brand C4 Energy. The investment gives KDP a 30% stake in the company, making it the largest investor in Nutrabolt behind its founder, chairman, and CEO, Doss Cunningham.
As part of the deal, KDP will sell and distribute C4 Energy in most of KDP’s company-owned direct store distribution territories. Nutrabolt will continue to distribute C4 Energy directly through its existing distribution network to the specialty, health club, and fitness channels. It will also keep working with some of its existing beverage distributors in certain markets. KDP can also increase its ownership stake under various capital-raising scenarios if it chooses.
Nutrabolt sales are expected to exceed $650 million next year, according to the companies. The equity investment is expected to close by year-end, while the transition of C4 Energy distribution to KDP should occur next year.
“This partnership represents a win-win transaction between our two companies,” said KDP Chairman and CEO Bob Gamgort, in a news release. “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.”
Cunningham added: “This strategic partnership will supercharge C4 Energy’s current growth trajectory by accelerating household penetration, enhancing distribution, and strengthening our overall commercial capabilities.”
As of Dec. 12, Keurig Dr Pepper is the second-largest holding in the Neuberger Berman Connected Consumer ETF (NBCC ), which targets companies that demonstrate significant growth potential from connectivity-based consumerism.
“Retailers need to reimagine their technology or business model to connect with the Gen Y and Gen Z consumers,” said John Aguilar, senior vice president and head of U.S. intermediary marketing at Neuberger Berman. “How are companies reimagining themselves to future-proof their business to connect with that digitally native cohort?”
Launched in April, NBCC spans a broad range of industries globally and may invest in companies of any market cap. The team will evaluate the web search and spending tendencies of millions of consumers and the daily call transcripts and filings of over 4,000 public companies to identify the best opportunities for mass adoption in the digital age. NBCC is managed by Kevin McCarthy, John San Marco, Kai Cui, Timothy Creedon, and Hari Ramanan.