Canadian energy drink maker GURU is going public, announcing earlier this week its plans to be listed on the Toronto TSX Growth exchange this fall through a reverse merger with Mira X Acquisition Corp.
As part of the deal, GURU is targeting a $20 million raise through private placement, which is being led by investment firm Stifel Nicolaus.
Founded in 1999 in Montreal, GURU produces an organic plant-based natural energy drink — available in full and reduced-calorie versions, as well as Matcha — in 8.4 oz. and 12 oz. cans. A three-SKU line of zero-sugar Energy Waters is sold exclusively in Canada.
The brand made its U.S. debut in the natural channel in 2005 and since 2017 has been building a presence in convenience and gas station retailers in the San Francisco Bay Area, where it is self-distributed in select 7-Eleven locations and independent stores.
Over the years, GURU has taken a disciplined approach to growth by staying cash flow positive while building primarily in its home province of Quebec, where CEO Carl Goyette said it has taken a 13% market share. Having seen sales multiply 4X over the last five years, he said the company began the process of seeking out a partner to help accelerate the brand last year.
Private equity investment was one of several potential options that the brand explored, Goyette noted, but the company was hesitant to enter into potentially restrictive contracts. Taking the company public allows GURU to remain “independent and entrepreneurial,” he added, citing inspiration taken from the success of publicly traded energy drink makers Celsius and Monster.
“We evaluated the options and there are pros and cons with every approach, but there are a lot of pros with going public, especially with our growth ambitions,” he said. “We assume we are going to keep growing and having a lot of success, which means down the road we will probably need funding, and that’s why we decided to take this route.”
Goyette, GURU founder and executive chairman Joe Zakher, and CFO Ingy Sarraf together hold 80% of shares. The company is in the process of finalizing two additional board members to be announced soon, though the CEO said the group may potentially expand to six or seven members in the future.
In keeping with the company’s playbook thus far, Goyette said GURU will be deliberate and methodical in how it allocates its new finances. Profits from sales in Quebec will continue to be reinvested there, but launching throughout Canada is now “something that we absolutely have to do.” Despite suffering a significant drop during the early stage of the pandemic, attributed mainly to reduced c-store traffic, he said the company was back on track to achieve around 70% year-over-year growth in gas and convenience channels in Quebec.
The strategy extends to the U.S., where Goyette said the company is planning a marketing push before considering seeding widespread distribution. California will remain the immediate focus, and any investment towards growing GURU’s store presence will be complemented simultaneously by additional marketing support.
“We obviously want to accelerate and spend in the U.S. like we have, but we’ve got to be very careful and methodical,” he said. “The U.S. is a huge market and it’s easy to burn a lot of cash. But we’ve developed the playbook over the last few years where it gives us all the confidence where we know the banners that we want to enter and we know how to play with them and build velocity with them.”