BODYARMOR: Innovation Fueling Ambitions to Hit $5B Sales Target

Having passed the $1 billion mark, BODYARMOR is aiming to leverage its combination of distribution muscle, marketing prowess and on-trend products to push the brand towards more ambitious targets, including doubling the business over the next three years.

In a fireside chat with Bonnie Herzog, managing director at Goldman Sachs Equity Research, BODYARMOR co-founder and chairman Mike Repole and president Brent Hastie spoke about the brand’s continued development, including its short and long-term growth projections, recent innovations and the future of its relationship with distributor and minority stakeholder Coca-Cola.

Building Platforms

Having launched in 2012 with the mission to create a better-for-you sports drink, BODYARMOR has largely succeeded in that task. Yet its next phase of growth is set to be driven by a broader approach to functional natural hydration.

Case-in-point: BODYARMOR Edge, introduced in February. The 4-SKU line, which features 100 mg of natural caffeine and over 1,100 mg of electrolytes per 20 oz. bottle, showcases the brand leveraging its credibility in the space to expand its platform and transcend the traditional sports drink category. As Hastie noted, BODYARMOR is positioned at the intersection of multiple trends — sports/sports participation, fitness and health & wellness — that represents a far larger addressable market than just sports drinks

Though Edge isn’t BODYARMOR’s first platform extension, the product’s performance thus far suggests that consumers are buying into the brand’s vision. According to Repole, in its first year, the line is expected to generate between $125-150 million in sales and is on pace for around $93 million in revenue. Elsewhere, BODYARMOR Lyte is projected to do $300-350 million in sales and BODYARMOR Sports Water is expected to reach $150 million.

“It took BODYARMOR seven years to get to $100 million in revenue for the entire brand,” said Repole. “And now we have a platform that in its first year is going to do $93 million in revenue.”

With license to keep innovating, Hastie told Herzog that the brand used the pandemic as an opportunity to “really think hard about what consumers want and need and what our brand can deliver.” Citing last summer’s partnership with Carrie Underwood to promote the low-calorie Lyte product, he said the company will continue to explore ways to open up the conversation around hydration and consumer needs.

“The overall strategic framework for the company now is ‘more than a sports drink,’” he said. “We see that in everything that we do and in the opportunities in front of us and we see a lot of runway for innovation, both with platforms that we have and also new platforms that we see the ability to launch over the next few years. We just want to make sure we are doing it in a way that the timing is right and that we are bringing the consumer along with us.”

Growing With (or Without) Coca-Cola

Ever since Coca-Cola purchased a 15% equity stake in BODYARMOR in 2018 (along with national distribution rights, previously held by Keurig Dr Pepper), the prospect of the soda giant becoming majority owner has loomed in the background, though potentially not for much longer. In February, news broke that Coca-Cola had begun the process of exercising its option to purchase BODYARMOR in full, and though that deal has yet to be finalized, Repole noted that he was eager to continue the relationship.

“My biggest question to Coca-Cola (in 2018) was can we build a brand within their system,” Repole said, noting that the company signed a three-year deal. “If I knew now, I would have taken a five to 10 year deal, because we are growing the brand within the system like crazy.”

While the deal remains incomplete, Repole said he “hadn’t heard anything” about Coca-Cola potentially declining to exercise its option for full purchase. Yet should that come to pass, he said the company has also explored going public. If, however, Coke does buy the company, Repole said he intends to stay with the brand, reiterating his ultimate goal of making BODYARMOR the top-selling sports drink.

“All I can say is Coca-Cola can buy 100% of the company. I can’t stop them on that because it’s a deal that I made three years ago,” he said. “But both Brent and I have been crystal clear to all the senior management team… that we want to stay for 2, 3, 4, 5 more years. We are having fun, we are growing 50% a year, and we want to take the brand from $1.1 billion to over $2 billion.”

He added: “At the end of the day, Coke and we have the same interests. It’s about making BODYARMOR the number one sports drink, it’s about maximizing this for the bottlers, and it’s about doing what’s right for the brand. I have tremendous confidence that whatever happens… will be what’s best for everybody.”

As noted by Goldman Sachs analysts, adding BODYARMOR allows Coca-Cola to lean into the premium side of the sports drinks/hydration category and command a higher price point than its PowerAde line. The brand’s aforementioned innovations have also proved more resonant with consumers than some of those from PowerAde, and have inspired (according to Repole) chief rival Gatorade to step up the pace of its own releases, such as Bolt24.

Building the Market

Now that BODYARMOR has surpassed $1 billion in sales, Repole has set his sights higher.

“How do we become a $5 billion retail brand over the next five to seven years — that’s the focus,” Repole told Herzog.

Noting that BODYARMOR’s success has lifted sales across sports drinks (“Gatorade should send me a thank you letter for getting in the category,” he quipped), Repole said he and Hastie expect the segment, currently $7.5 billion, as surpassing $10 billion by 2024 and $15 billion by 2030. As it continues to develop products that tap into the macrotrends of sports, wellness and fitness, the brand’s actual reach is much more than sports drinks.

“There’s been an awakening in this category where it had been flat for many years and now it is growing in double digits,” Hastie said. “Brands like BODYARMOR have come in and reshaped how you can address those needs, and drive incremental growth. One of the strongest data points we have about our brand is that 75-80% of growth is incremental.”