Sweet Licensing Deals & Cannabis Sports Drinks

0:04Welcome to the CPG Week podcast by BevNet and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, managing editor of NOSH, here with my co-hosts Brad Avery and Lucas Southern. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we're discussing licensed and co-branded innovation and THC-infused sports drinks. But first, I tried the Oreo-flavored Coca-Cola this weekend. Have you guys had that yet? No, but I absolutely will. I can't say I'm as excited. I'm not a big Coke drinker, but I do have a soft spot for Oreos.

0:47So I would have a sip. I don't know if I'd have a whole can. All the rest of the can. It's fine. Okay, then we'll share. I had the zero sugar variety and it was really good. It tasted like Oreos. But what I really wanted to find was the Coca-Cola flavored Oreos. Now we're talking. So that's something I would try and I would probably eat too many of those and feel bad later. See, I'll have them both. Would you dip your Oreo in your Coke Oreo? Absolutely. You got to double both flavors. Okay, now we're on to something. We've seen so much of these co-branded products rolling out over the past few years, but I don't know that I've ever seen a partnership that goes two ways like that, where there's Coke flavored Oreos and Oreo flavored Coke.

1:30It's kind of brilliant. Yeah, because you're hitting both sides of the market. For me, I'm not a Coke drinker, but I do love Oreos, so I'll try one and not the other. So it works for both the brands. I also think that you have two flavors that actually are probably, at least in my head, going to go together really well. Sometimes you see these partnerships, and it's totally random, and it's just sort of a gimmick, and you're like, it sounds kind of gross, actually. This, I'm like, ooh, I want to try that. I think it's going to work. Well, and the fun part about the Oreos is it has popping candy in the cream to simulate the carbonation experience of drinking a Coke.

2:03So, yeah, it's a pretty cool partnership. I'm excited about it. They got me thinking, what other food and beverage brands should collaborate on a new product? Flamin' Hot Tatina's Pizza Rolls. Oh. I did recently see there's a cannabis edibles brand that is doing Flamin' Hot, like, Rice Krispie treat edibles, which I was like, hmm, okay, that's interesting, not my thing. but I bet there's a subset of people that love their Flamin' Hot and want it in edible cannabis format. Yes, donors. Dr. Norm's, if you want to look it up there. You seem intrigued and interested. Personally, my collaboration that I haven't seen that I would love would be Nutella in like a frozen mochi, like my mochi, but with Nutella inside, like a Nutella flavored.

2:53Okay. What about Jolly Rancher energy drinks? That sounds good too. No thank you for me, but you know, I'm open to new things. Well, if you do decide to try it, C4 has officially partnered with Hershey's for a line of co-branded flavor launches. There's Jolly Rancher flavor of their 16-ounce energy drinks. There's also a pre-workout powder flavored like bubble yum. And for the first time in C4, they're doing protein powders with Hershey, milk chocolate, and Reese's flavoring. This is, of course, a continuation of C4's strategy of doing co-branded candy flavors. They've previously done Skittles and Starburst, as well as Popsicle.

3:35We've seen this trend a bit in the performance energy space. Ghost has really pioneered it. They have Warheads and Sour Patch and a lot of other brands. There's also Rise that has done some of these similar types of partnerships. And I was able to talk with Kyle Thomas, the chief commercial officer for Nutribolt, C4's parent company, about this strategy. And he said that these co-branded flavors can drive 60 to 65 percent incremental sales for energy. Wow. That's that's that's a lot of sales. It's interesting that the protein powder move because I have seen that a lot in this kind of nutraceutical supplement space.

4:12Is this like an identity thing or is this about bringing new, maybe younger consumers to the brand with these recognizable kind of sweet candy flavors? The answer is yes. It is a little bit of both. And I thought what was interesting is that Nutribolt, the parent company, has done protein under the Cellucor brand. It's not that they don't have this, but it's the first time they put it under C4, which is traditionally focused on energy and pre-workout specifically. And one reason is the rise of GLP-1 drugs, the need for protein shakes for users of those drugs to maintain muscle mass. But also, this extends the C4 brand into these categories.

4:53And by co-branding with Hershey and Reese's, you draw consumers in for that trial who either have this childhood nostalgia for the flavors or just are curious about the novelty or just know that they like it and assume that, hey, if it tastes like Reese's, I'm probably going to like this. So I'll give it a shot. This is a really common strategy that we've seen a lot with big brand innovation. I've been reporting on some of the major launches from big CPG companies and how startups can learn and adapt product development strategies from their playbooks. And one of the things that we've been seeing a lot of lately are big brands moving into new spaces via licensing and co-branding.

5:35Cinnamon Toast Crunch has been kind of a leader lately in this space. We just saw them partnering with Hormel on some bacon that's been rubbed with the CineDust, which is the official name of the seasoning. the cinnamon sugar. Wait, that's what they call it? They call it CineDust. I had no idea. Previously, General Mills partnered with B &G Foods to release CineDust as seasoning that you could shake on popcorn and your cinnamon toast crunch from, I don't know what else you would put it on. Extra, extra cinnamon toast. That's right. But this is a brand that's moved into the baking mix aisle. We've seen it in snacks.

6:11We've seen it in a lot of different spaces. And it just shows that people are looking for familiar, trusted brands in new ways, new formats. To your point about C4 and Hershey, Brad, that's kind of where the consumer is right now, especially amid ongoing inflation. They want to spend their money in something that feels like a safe experiment. So something that's a little new and novel, but familiar and comforting. So for my story, I also decided to talk to Joshua Shaw. He's an industry observer, and owner of J. Shaw Consulting. And he did make an interesting point that as these co-branded trends become more common, that is going to have an impact on retail sets.

6:59At a certain point, retailers are going to be thinking about how they are arranging these displays, how much space they're allotting to the co-branded partnerships because they're becoming more common. And so right now they're very eye-grab But eventually it is still going to revert to the old standards of CPG rules, which is, you know, is it getting sell through? What is happening in the protein and energy categories or the sports performance categories? I've noticed over recent years a lot of movement towards nostalgic, indulgent flavor profiles, cookies, candy, cereal. Well, I think if you look at the recent history, as far as energy drinks go, you can maybe attribute part of the candy flavor rise to Bang that embraced some of those flavor profiles without doing co-branding.

7:55And then that quickly turned into let's just get the real brand name on the can. We've also been seeing it for much longer in the supplement space, and we know that Ghost in particular has done that in their whey protein with Oreo and Chips Ahoy and a lot more. So I think consumers want that flavor profile, whether it's co-branded or not. I mean, you can look at brands like Koya that have cereal flavor protein shakes. They aren't co-branded, but there is a sort of fruity cereal with what looks to be Froot Loops, but not officially on the bottle, or a cinnamon cereal, much like the Cinnamon Toast Crunch Illusion.

8:38So brands are embracing these flavors whether they have these licensing deals or not. And consumers are as well. speaking of sports drinks lucas you recently wrote about thc in the category can you tell us more it's actually interesting we had this conversation about sugar flavored energy drinks because one of the brands i talked to jimweed also has a candy shop flavor and uh i believe it was a rainbow sherbert flavor that they released yeah so so you know this is this is across the board in energy and now I guess in THC as well, which isn't surprising. So the feature I wrote, working it out, will THC-infused sports drinks improve category performance, kind of was taking a look back at what we were seeing with CBD at the early 2020s when CBD seemed to be finding its way into a lot of hydration and sports drinks.

9:36Defy was the big brand that I think was one of the trailblazers for this, and it was backed by NFL player Terrell Davis. As far as I can tell, Defy is no longer around. They would not respond to many requests for comment and they haven't been posted on the social media for about a year now. But that being said, there's still a lot of CBD in sports drinks and hydration. What we are seeing is kind of an evolution. So we've got two kind of paths that are happening. One is we have some CBD brands that are either pivoting away from CBD, Jim Weed being one of them. They launched with a hemp extract in their fitness-focused energy drinks.

10:20And about a year ago, they realized that their non-CBD line of adaptogenic energy drinks were actually about 90 % of their sales. So they took hemp out of their formulation and now just rely on ashwagandha as the kind of calming, anxiety-reducing functional ingredient as well as some other functional ingredients. And then you have Adapt Super Water, who launched with a bottled liquid beverage and pivoted into hydration powders, all of which include CBD. they've gotten rid of their liquid bottles and are just solely in powders now and they're on the cusp of launching a hydration powder that doesn't have cbd mostly because talking to richard harrison the the founder he said we just without proper regulation from the fda which everyone was expecting like four years ago they really can't get into a lot of mass retailers and and it really puts a hindrance on how they can market the product if it has CBD in it.

11:28Now, on the other side, there are THC companies, both in the regulated dispensary adult use channel, as well as operators in the hemp-derived kind of D2C-focused model that are incorporating actually low-dose THC into their hydration powders and gummies and beverages as part of the formulation for recovery and for focus. One brand that has been around for about five years now is called Offfield. That's with three Fs. So mind your Googling. But they do gummies, both with CBD as well as with THC. They do beverages, canned beverages, and they do powders, all of which have CBD in them, some of which have THC and some don't.

12:20And they have kind of really marketed themselves on this run high mentality, which they link to the cannabinoid, the endocannabinoid system, being intrinsically connected to the runner's high that people feel, which was attributed to endorphins. Is there any benefit to performance that they're pitching as, or is it more just that it's fun? It's a little both, I think. I definitely had some sources say, look, when you have a little low-dose THC in you while you're out for a run or doing a sport, it does increase your focus. And there are some recovery benefits to THC. It can be seen as an anti-inflammatory.

13:06It can be seen as a pain reducer. And so there are some perceived benefits. Personally, someone who does like low-dose hemp-derived THC beverages, I don't really want to be using it before I work out, but I will gladly have a drink after I've went on a long run or something, but to each their own. I think more than anything, a lot of what the sources I talked to were saying is that the proliferation of low-dose THC, whether in the regulated market or in the hemp-derived, is really kind of easing the prohibition on the functional ingredient, THC, in many different iterations. And now we're seeing it kind of spread out into outside of the alcohol alternative category, but into sports drinks and hydration and being used in other ways.

13:53And I think that is an interesting point to this. Where are these brands selling right now? I mean, how wide is their distribution? Are they going through dispensary channels? Is this Delta 9? Are they going for sporting goods stores? I don't think there's a lot of sporting goods stores, but there's definitely a little of both. So one brand I talked to is called Vibations, and they are purely in the regulated dispensary channel. They do another powdered hydration with a low dose of THC, and they're operated by a company called MeriMed, which does a variety of cannabis products solely for the adult recreational use category and the medicinal, but not hemp-derived.

14:36This is a marijuana product. Now, off-field, as I was talking about is a hemp drive product. And so they're operating mostly through DTC because that is the best mechanism to get products to customers in the hemp derived category. Because as we have seen last week with or two weeks ago with California and then last week with New Jersey, it has become increasingly difficult to get hemp derived products into retail channels. So New Jersey last week passed a similar law to what happened in California. This time it went through the state legislature and was signed into law by the governor, basically putting all intoxicating hemp in the hands of the cannabis control regulatory body and forcing everything to go through dispensaries, which is slightly different than California.

15:26But then you have something out of North Carolina that happened this week, which basically North Carolina, somewhat similar to what happened in Minnesota, inadvertently legalized smokable intoxicating hemp in their state farm bill. And you just had basically the state say, hey, like this kind of happened. We weren't intending it, but it also really hasn't caused anything bad. So we're going to keep it. It's interesting. Who would have thought that accidentally legalizing weed would be so chaotic for the country? You know, it really is a state by state approach. I went to a race expo in April and I picked up something called Hydration, H-I-G-H, Hydration.

16:13And it was made with Delta 9 THC and electrolytes. It was stick packs. But I was too scared to consume it before the race. It has 40 milligrams of CBD and 10 milligrams of THC per serving. That seems like a lot to me. Most of the ones that I was looking at and the brands I was talking to were somewhere in the like three to five range, which I consider more of the low dose. Ten seems a lot unless you are a regular THC user. But again, this is the problem with THC in that everyone has their own tolerance. I'll just stick to Fireball in the race. But again, I wasn't about to test my tolerance while running a half marathon.

16:55Well, I watched a YouTube video the other day of a guy taking like 50 milligrams in edibles and then running 13 miles around Manhattan. So, you know, to each their own. Some people like it. Not for me. Here are some other notable bits of news from the week. General Mills selling North American yogurt business for$2.1 billion. Juneshine adds non-alcoholic kombucha to portfolio. And Inside Fancy Pants Baking Company's plans to scale its new cookie line. For these stories and more, become an insider at BevNet and Nosh. That wraps up this edition of CPG Week by BevNet and Nosh. Thank you to our audio engineer, Joshua Pratt.

17:37Our director is Mike Schneider. And our designer is Aaron Willett. If you enjoyed the podcast, please subscribe on your listening platform of choice. And we will see you next time.

17:55Thank you.