Upstart sports drink brand BioSteel has announced a U.S. retail expansion that will see the brand enter nearly 15,000 new locations nationwide across grocery, convenience and drug chains this year.
Though it has been around since 2009, the company — a division of Canadian cannabis conglomerate Canopy Growth Company, itself backed by liquor and spirits giant Constellation Brands — has recently put itself forward as a new player within the evolving RTD sports drink category, which, following Coca-Cola’s $5.6 billion acquisition of BodyArmor last year, has been consolidated mainly between Coke and chief rival PepsiCo. Positioned as a better-for-you alternative, BioSteel’s zero sugar RTD line, launched in October 2020, is available in Blue Raspberry, Mixed Raspberry, Rainbow Twist, Peach Mango and White Freeze, and retails for $2.29-$2.49 per 16.7 oz. TetraPak.
According to a press release, the new retailers include Albertsons Company, Food Lion, Giant Food, Publix, Stop & Shop, Rite Aid and Sheetz, as well as “over 20 additional national, regional and local grocery, convenience and drug chains.”
“As we continue to introduce Clean. Healthy. Hydration. to consumers in the U.S., we’re thrilled to be working with these new retailers to grow our presence on shelves and in communities throughout the country,” said John Celenza, co-CEO and co-founder of BioSteel. “We’ve seen strong growth and customer retention rates among athletes and health-conscious consumers, and with these new deals, we’re able to make our sugar-free, ready to drink sports drinks even more accessible.”
Citing grocery and convenience stores as the initially “drivers” for growth, co-CEO Michael Cammalleri told BevNET in October that the brand is currently the seventh largest in terms of market share within the U.S. sports drink market, and aims to ascend to the fourth-top position in the future. The product moves through over 200 houses via Constellation’s DSD network, and has benefitted from beer distributors’ increasing interest in non-alcoholic products. The RTD launch helped boost revenues by nearly 50% to $6 million in Q2.
On a bigger level, the brand is helping Ontario-based Canopy to expand its U.S. presence across zero-proof categories – including with CBD drinks like Quatreau – and to prepare for the introduction of cannabis-infused (THC) beverages, assuming the eventual lifting of federal restrictions around its sale. The cannabis operator has yet to move revenues into the black since Constellation Brands first invested in 2017 (it has since upped its stake), with net revenue declining 3% in Q2 of fiscal year 2022 versus the same period in 2021. Adjusted EBITDA loss in Q2 2022 was $163 million, a $77 million wider loss versus Q2 2022, which the company attributed in part to “lower sales” and “a decline in gross margins.”
Meanwhile, BioSteel’s momentum has been encouraged by recent pro sports partnerships (U.S. Soccer Federation, multiple NBA teams) and a positive report from Goldman Sachs Equity Research last year that called the brand an “emerging disruptor in the sports drink category” that “reminds us of an early stage BodyArmor.”