BioSteel, the Canopy Growth-backed upstart looking to break into the US ready-to- drink sports hydration category, will announce today a distribution deal with Reyes Holdings, the country’s largest beer distributor. Reyes is among a host of distributors aligned with brewer Constellation Brands that will take BioSteel to US retail nationally. In May, the North American brand launched an RTD version of its powdered sports drink (BD 4/14/20). BioSteel is majority owned by cannabis-producer Canopy Growth. In turn, Canopy is roughly 35% owned by Constellation. The connection flung open the door for BioSteel to quickly ramp up a direct-store delivery network, Co-founder John Celenza said in an interview before the announcement. The Reyes distribution agreement covers territory in California and Florida. Manhattan Beer has signed on in New York. “It’s been crazy,” Celenza said. “I come to work in a hoodie and just do distribution deals all day.” BioSteel has been offered to Constellation- aligned beer distributors nationwide. Areas outside of the “gold system” will be handled with mostly non-alcohol distributors, including some who lost Bodyarmor to the Coca-Cola system in 2018. “We’ll have the whole country blanketed and signed away in the next 60 days,” he said. The product will begin showing up on retail shelves in December.
DSD OR BUST. Founded in 2010, BioSteel sold hydration powders for a decade before launching an RTD product in resealable Tetra Pak cartons online earlier this year (BD 4/14/20). The drink contains electrolytes sodium, potassium, chloride, calcium and magnesium. It has 15 calories, contains no sugar, and is sweetened with stevia. Celenza said he’s held off on major retailers that were ready for warehouse delivery of the RTD product. “We’re a DSD brand. We’ve got more marketing assets than you can shake a stick at. We want to be properly merchandised in the store,” he said. “I don’t know how you can compete with the big boys if you’re not a DSD brand. We’re not doing this as a hobby.”
BROADER GAME PLAN. The work by Canopy and Constellation to help build a distribution network for BioSteel won’t stop at sports drinks. According to Celenza, Canopy hopes to one day distribute cannabis-infused beverages through the same distribution network once the US regulatory landscape for CBD as a food ingredient becomes clearer, he said. “BioSteel is the guinea pig through the tracks,” he said. “With these types of strategic moves, it’s now starting to make sense why Constellation invested $5 billion in Canopy.”
VETERAN TEAM. Last month, BioSteel brought in former Rockstar Energy and Red Bull veteran David Giancoulos as president of RTD. He came from PepsiCo, where he was VP of sales and marketing for Rockstar after PepsiCo purchased the brand in April. In addition, Greg McCauley, who has worked for Miller Brewing, Red Bull, CytoSport and Aquahydrate joined as SVP of sales and distribution last month. Celenza credited Constellation Brands CMO Jim Sabia with “showing him the ropes” and introducing him to distributors and retailers. Celenza and Sabia were introduced by Canopy CEO David Klein. “Jim’s my guy,” Celenza said. “I’ve gone to ‘Sabia U’ over the last couple of months. I owe a ton to him.”
PRODUCTION. While BioSteel is currently contract-manufactured, Canopy and Constellation have allocated capital to soon add production lines for BioSteel at existing Constellation facilities, Celenza said.
“WE’RE NOT GOING TO GO AFTER ANYBODY.” For a brand few in the US have heard of, BioSteel has managed to leverage its corporate backers -- as well as a decade of credibility with pro athletes when it comes to its powdered product -- to pull together a suite of high- caliber celebrity US endorsements. In August, BioSteel announced an investment and endorsement deal with Super Bowl winning NFL quarterback Patrick Mahomes. In October, the brand added sportscaster Erin Andrews and MLB pitcher Mike Soroka, among others. NFL stars Ezekiel Elliott and DeAndre Hopkins had signed on even earlier. While BioSteel will look to break into a sports drink market dominated by PepsiCo’s Gatorade, Celenza doesn’t expect to adopt the tone of challenger Bodyarmor, which has won category share with a differentiated offering and in-your-face marketing approach. “We’re not going to go after anybody. BioSteel is BioSteel,” Celenza said. “I don’t feel like we need to attack Gatorade or Bodyarmor, because what we have is so authentic. I just want to continue to tell our story. We’ve had the best-kept secret in pro sports for 10 years. I get checks from the best teams in the world. They choose us. It’s been the stuff coming out of the other people’s bottles for years. Now, we’ve got the backing and the brand to do it.”
REYES CONFLICT? While Reyes’ beer distribution arm will distribute BioSteel, Reyes Coca- Cola distribution businesses on the West Coast and in the greater Chicago region distribute Powerade and sports drink challenger Bodyarmor. Celenza said there is no conflict because the brands are in different systems within Reyes’ US empire.
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