U.K.-based private equity firm True. announced this week that it has acquired a majority stake in direct-to-consumer energy drink maker Sneak Energy for an undisclosed sum. The deal is intended to fuel Sneak’s international expansion as it grows its ecommerce business and makes advances into European brick-and-mortar accounts.
What is Sneak Energy?
Founded in 2018 and based in Manchester, England, Sneak Energy produces a line of powdered energy drinks sold in multi-serve tubs and single-use sachets. To date the brand has been sold almost entirely online, with about one-third of its business done in the United States and the remaining sales going to the U.K. According to co-founder Jonny Teeling, European sales were halted this winter due to complications related to Brexit, but the company is preparing to relaunch in the market in the coming weeks with the opening of a new warehouse.
Sneak’s sales spiked last year during the pandemic, now up over 200% over the past three years, while the company has grown from 10 full time employees in 2019 to 30 today. Teeling noted that while the U.S. used to comprise about 50% of its business, the pandemic and Brexit led to a rise in U.K. sales that has shifted the mix to “about 65%-35%” between the two countries.
Last year, Sneak introduced an RTD line exclusively in the U.K. with flavors including Purple Storm, Blue Raspberry, Tropikilla and Strawberry Watermelon. Sold in 16.9 oz.cans, the drinks contain zero sugar, 150 mg of caffeine and are available online and are now rolling out into limited retail distribution. While the company hopes to eventually bring the cans to the U.S., Teeling said a stateside launch is probably at least a year away. However, the company is now aiming to ramp up its U.S. ecommerce sales with plans to hire sales specialists to focus on the American market (however, it is not yet determined if the new hires will be located in the company’s Manchester homebase or if it will set up additional operations overseas).
Initially pitched towards gamers, Teeling said the brand’s reach has broadened over the past two years to target a more general working millennial consumer base, while still aiming to appeal to its core gaming audience.
“A lot of gamers consider themselves content creators; people who are videographers, photographers, filmmakers — we want to be the go to energy drink for the creative class,” Teeling said. “But as you see with the legacy brands in industry, your Red Bulls and your Monsters, both of those have a legacy culture…. But the lion’s share of people consuming those products, realistically, use it for various things like long hours at the office, working in warehouses, night shifts. So we’re actually beginning to see that behavior across our brand as well.”
The wider reach also pushes Sneak outside of direct competition with other gamer-focused energy brands such as G FUEL, a New York-based company which similarly sells powdered and RTD energy drinks. In March, G FUEL ranked #91 on the Inc. 5000 Regionals: New York City Metro list, reporting 119% two-year revenue growth between 2017 and 2019.
While both G FUEL and Sneak regularly drive sales through exclusive and limited edition product launches, Teeling said Sneak has “doubled down” on its community-focused marketing efforts. In addition to leaning into digital campaigns and ambassador partnerships, the company is also looking to launch U.S. exclusive flavors that “more readily suit the U.S. palette.”
“The community drives a lot of our decision making, we’re actually doing a lot of work with the community at the moment to help us decide on future marketing campaigns to ensure that they are aligned with where customers want to see,” he said. “So you’ll see more of that over the next 12 to 18 months, and also just more presence in the U.S. market specifically”
Why make this deal?
In order to meet its international goals, Teeling said the company knew it needed a long term financial partner. Co-founded by Matt Truman and Paul Cocker, True. invests primarily in early stage companies in the consumer and retail sector across Europe, with a portfolio including brands like health food group Soulfresh, online fitness platform Zwift and women’s loungewear maker Hush.
“Jonny and [Sneak co-founder Will Peirce] have done a fantastic job of bringing a clean, differentiated energy drink to market and creating a brand that truly resonates with Sneak’s core customer base of next generation gamers and creatives,” Cocker said in a press release. “They’ve also built a fantastic team and a culture that’s very aligned with our own – they’ve been deliberate in trying to find a partner that can help them with the next stage of their growth and we are looking forward to utilising both our digital expertise and our international network across grocery and retail.”
True. will gain two seats on Sneak’s board of directors (with Cocker taking one of those seats) and will help the company craft a long term growth strategy, Teeling said. He noted that in seeking out a private equity partner, he and Peirce were cautious of firms that may seek to immediately cut costs for short-term profit and went with True. because of their commitment to a years-long growth timeline.
“They understood our culture and we never thought that they would be overly imposing and would let us do what we have shown that we are good at,” Teeling said. “But at the same time, they’ll be there when we need a bit of assistance and a bit of help. They have a wealth of experience we can lean on should it be required, so it seems like a very collaborative approach as opposed to a heavy-handed approach, which can often be expected from private equity.”