After announcing the closing of a $29 million Series B funding round on Thursday, performance energy drink brand A SHOC is looking to increase brand awareness and fuel its expansion with the support of its expanded athlete investor team, according to CEO Paul Nadel.
The company, co-founded by Lance Collins in 2019 and backed by investment from Keurig Dr Pepper (KDP), had been operating on its original funding and revenue until now, Nadel said. Last summer, Nadel proposed raising a Series B during a board meeting, and Collins and KDP CEO Bob Gamgort agreed to forfeit a portion of their stake in the brand in order to allow additional strategic investors to come in through a new round.
“Both Lance and Bob Gamgort said essentially the same thing, which was ‘Look, you know we can cover the round, that’s not an issue. We’re supportive of the company, we want to stay involved and keep our percentage interest, but we think the company would be better served, if what we did is we went out and did a strategic round, and bring in some new blood, bring in some people who you think now that you’ve got a couple years under your belt can be additive,’” Nadel said. “More than just a check, quite frankly.”
California-based A SHOC produces a line of better-for-you, functional performance energy drinks. In February 2021, the company introduced its plant-based Accelerator line made with a natural blend of caffeine using coffee fruit, guarana seed, yerba mate and green coffee.), the brand is distributed by KDP to over 112,000 retail doors nationwide.
The round includes participation from existing investors, including Collins and KDP, as well as a group of individuals including professional golfers Brson DeChambeau, Brooks Koepka and Lexi Thompson; MLB players Aaron Judge and Freddie Freeman; NASCAR Cup Champion Chase Elliott; pro skateboarder Paul Rodriguez; NFL defensive end Chase Young; and Good Morning America host Michael Strahan.
Nadel said demand among investors was high: A SHOC initially set the goal for the round at $18 million, which “filled up real quick” before raising the bar to $24 million and ultimately cutting off the round at $29 million, with latecomers being turned away. He noted that all investors were offered the same per unit price in order to ensure equality among the participants, including Collins and KDP.
The new funding arrives, however, as Gamgort prepares to step down as CEO this summer after overseeing the merger between KDP’s predecessors Keurig Green Mountain and Dr Pepper Snapple Group. He will remain with the company as Executive Chairman for two years while CFO Ozan Dokmecioglu will assume the CEO role in July.
Nadel praised Gamgort’s work with KDP and support for A SHOC, but said he doesn’t anticipate the partnership between the brand and KDP will fundamentally change after the transition, noting that A SHOC has formed relationships throughout the conglomerate’s network.
“Bob is unique – he’s uniquely talented and uniquely gifted.” Nadel said. “But as far as our day-to-day relationship, happily we have, at this point, broad base buy-in at KDP and I’m happy to say very strong relationships and a lot of give and take. And I don’t foresee that ever changing. Obviously, as an enterprise, Bob no longer being CEO is relevant, but for our purposes it’s business as usual.”
Much of the new financing will go towards expanding A SHOC’s national sales team and deepening its existing partnerships with action sports media platform Thrill One and Hendrick Motorsports, as well as forging relationships with additional entertainment and sports partners.
With a broad roster of celebrity athletes now involved, Nadel said the company is hoping to tap drive brand awareness through its influencers. While Chase Elliott had previously been involved with the company, launching a signature limited edition can last year, the wide range of new athlete partners will quickly expand A SHOC’s reach.
Nadel said that it was particularly important for each athlete partner to be a true believer in the brand in order to communicate authenticity to the consumer.
“That’s how we’re gonna utilize this group, it’s that they’re really believers,” he said. “I don’t think you can fake that. I mean, celebrity does a lot for consumer packaged goods by building impressions, and obviously a huge star holding a can, holding a bottle, holding a bag gets you wonderful brand awareness. But it doesn’t necessarily translate into pull if there’s not the connection.”
Nadel also teased new announcements in the coming weeks, including product launches and a new summer marketing campaign set to begin next month. This new push will be particularly important for the brand as it aims to differentiate itself in a crowded performance energy set that now includes rising competition from brands like ZOA and Celsius, among others. Nadel said A SHOC has had to frequently respond to shifting category dynamics and consumer interest in the emerging subcategory, most recently introducing 12 oz. cans on its Accelerator line to compete with similar innovations.
The brand has also been confronted by other challenges. In April 2021, Celsius sued A SHOC alleging trade dress infringement due to perceived visual similarities between its drinks and the Accelerator products. As well, amid overall sales deceleration for beverages, NielsenIQ reported KDP energy sales were down 13.4% in the two-week period ending March 26 to $49.5 million.
But with its expanded team behind it, Nadel is optimistic A SHOC can leave an impact on the category.
“We’re not doing anything that’s just a stunt, or something that we’re just hoping to get eyeballs,” Nadel said. “It all has to reinforce the messaging of why we’re different and who we are. That’s our play, that’s our bet. And KDP has embraced it and Lance has embraced it, and now this new group of investors has embraced it. So, you know, we’re hopeful that we get the message out and again, people hear and see it and feel like we’re speaking to them.”