Sports and nutrition brand FRS has announced it is terminating its deal with PepsiCo at the end of the year and turning much of the responsibility for its chain account management to sales and distribution organization L.A. Libations.
For the past three years, the independently-owned, quercetin-based brand has used PepsiCo’s warehouse distribution system to reach major grocery and drug chain accounts. That system is also employed by Gatorade, among other Pepsi-owned brands, and the arrangement resulted in the independent brand failing to receive the kind of support it felt it needed, according to CEO Carl Sweat.
For example, Sweat said, in chains covered by PepsiCo, the brand has “less than one percent” of the available in-store display coverage, “it has been difficult to come by and was a facet of the system that we thought was going to be much stronger in a system with their capabilities.”
The move to work with L.A. Libations, a company founded by former Coke and DPSG employees Danny Stepper, Dino Sarti, and Pat Bolden, is one both parties believe will allow the FRS brand to find more paths into the store. According to Sweat, Stepper has already helped the company move its Slim and Protein lines into the Costco system via its Health and Body Care department instead of traditional beverage placements like energy or sports drinks.
For its part, L.A. Libations has proven to have remarkable facility for finding the right paths toward building functional and entrepreneurial brands within chain accounts. The company was able to move coconut water brand Zico into both the drug channel and into Target, for example, and also helped Slap! Energy grow in Wal-Mart through a relationship with video distributor Anderson Merchandising.
The company has strong ties to the Coca-Cola Venturing and Emerging Beverage (VEB ) Unit, where it has shepherded new brands like Illy Caffe and CasCal, while also helping with Evian on the West Coast. As proof of its brand-building capabilities, it has also launched its own brand, Aloe Gloe, into several key retail accounts in the past year.
“Ultimately, when you’re a brand in a big system, you need somebody that’s going to bed everyday thinking about the brand and wakes up thinking about the brand every day as well,” Stepper said. “We’re basically going to do for FRS with what we do with ZICO, with Illy, with Aloe Gloe.”
The relationship actually predates the termination letter, which Sweat sent to PepsiCo in June. The L.A. Libations crew began meeting with Sweat in the early spring, helping discuss strategy for retail customers like CostCo that may have fallen outside the Pepsi contract. While FRS plans to be distributed through the Pepsi system through the end of the year, in many cases meetings with customers will now feature an L.A. Libations contact as well.
The move will put extra pressure on the FRS network of independent distributors, although that is a network that has been growing over the past two years. The brand’s original move into the Pepsi system had involved chain convenience accounts as well, but as Gatorade transitioned into independent bottler accounts FRS changed the contract to allow it to build up its own DSD network to support convenience. The “wins” that the network was able to generate have been some of the examples that Sweat has pointed to most prominently in terms of the brand’s growth in recent months.
Sweat and Stepper knew each other through their previous work at the Coca-Cola Co., and both have worked closely with FUZE creator and Body Armor founder Lance Collins.
While both Stepper and Sweat were coy about the possibility that the sales organization would be an investor in FRS, L.A. Libations “has the possibility to participate in the upside,” according to Sweat.
Meanwhile, the addition of FRS to the L.A. Libations portfolio should also help that company by broadening its already-burgeoning portfolio and giving it a product that directly deals with the health and fitness space.
“A lot of retailers look to us as the emerging brand table captain,” Stepper said. “This fills a big gap for us that we had in the sports and nutrition space.”
But it’s that portfolio that helped the relatively small organization prove it could be a good alternative from Pepsi, according to Sweat.
“Instead of once-a-year resets, they’re speaking to their customers all the time about a cadre of high-performing functional beverages,” Sweat said. “We feel we’re on the forefront with a number of the brands that L.A. Libations represents with that clustered approach.”