Bryant’s US$400m investment win
THE sports drink market is heating up. In 2018, Coca-Cola acquired a 15 percent stake in BodyArmor for US$300 million at a US$2 billion valuation. The brand was doing roughly US$250 million in annual sales at the time — less than 5 percent of the total market — but had the ambition to take on industry leader Gatorade.
Fast forward three years and the market looks completely different.
Sure, Gatorade is still the industry leader, owning a massive 64 percent of the US$8.4 billion sports drink market. Still, BodyArmor has now surpassed Powerade, becoming the second-largest sports drink maker with a whopping US$1.4 billion in sales.
BodyArmor annual sales
2018: US$250 million
2021: (E): US$1,4 billion
That’s a 77,58 percent compounded annual growth rate — insane.
So, Coca-Cola returned to the well, spending an additional US$5,6 billion yesterday to acquire the remaining equity stake that they didn’t already own and officially assuming complete control of the upstart brand.
The interesting part? Kobe Bryant acquired 10 percent of the company for US$6 million in 2014, serving as a board member, creative director, and the brand’s 4th-largest shareholder until his passing in 2020.
After dilution, his wife and children will take home US$400 million — that’s a 6,566 percent gain and more money than Kobe made during his entire 20-year NBA career.
That’s amazing, of course, but it’s just part of the story.
Mike Repole has been an entrepreneur his entire life.
Growing up in Queens, New York, Repole had a passion for two things — sports & business. He had magazine subscriptions to both Sports Illustrated and Money magazine, reading them religiously.
But after realising he wasn’t going to be a professional athlete, Repole decided to pursue his passion for business and enrolled at St. John’s University. First, he tried to get a degree in Finance, but “wasn’t very good at it,” so he eventually switched to Sports Management and graduated with a “stellar 2.2-grade point average” in five years.
Repole spent the next seven to eight years working various jobs throughout the beverage industry. He was working his way up, from a beverage salesman at Mistic Beverages to a Vice President at Crystal Geyser, but he found himself wanting more.
The result? Mike Repole and a partner teamed up to launch Energy Brands in 1999, more commonly known as Glaceau.
The idea behind Energy Brands was simple — to create enhanced water. The popular “Smartwater” was their first product, but just a year after that, Repole and his team introduced “Vitamin Water”, and sales took off just a year after that.
Energy brands sales
1998: US$0
2007: US$1 billion
In an attempt to catch up to Pepsi in the non-carbonated drink market, Coca-Cola came calling and ended up purchasing the company for US$4,1 billion.
Repole and his partner made millions of dollars on the deal, of course, but the best part is that their employees also did.
After the US$4,1 billion sale to Coca-Cola, Mike Repole joined Pirates Booty as chairman. He became the largest individual shareholder, and within five years, he had worked his magic again.
The company had grown 400 percent and was acquired for US$200 million. Still,
even with two successful exits under his belt, Repole couldn’t sit on the sidelines for long.
Less than 24 months later, Mike Repole and Lance Collins founded BodyArmor — a healthier alternative to Gatorade and built on the idea that people were “tired of the same old sports drink.”
Repole was correct, again. The drink was low in sodium, packed with electrolytes, coconut water, and antioxidants, and athletes flocked to it.
The BodyArmor team aggressively started signing endorsement deals and taking investments from professional athletes. If it was good enough for the best athletes in the world, isn’t it good enough for me? That thought process worked, and sales exploded.
BodyArmor now owns nearly 20 percent of the US sports drink market and has seen its valuation increase from $25 million in 2013 to US$8 billion today.
US Sports drink market
ownership
Gatorade: 64 percent
BodyArmor: 18 percent
Powerade: 13 percent
Kobe Bryant turning US$6 million into US$400 million is the headline story. Still, the brand’s earliest investors, like Mike Trout, Andre Luck, Buster Posey, James Harden, and Rob Gronkowski, will likely see US$10-million-plus payouts from the acquisition also.
In addition, essentially every BodyArmor endorsement deal throughout the years included some equity component. So, several athletes most likely profited from the sale also, albeit on a much smaller scale.
Athletes that owned BodyArmor
equity
◆ Naomi Osaka
◆ Baker Mayfield
◆ Klay Thompson
◆ Skylar Diggins
◆ Sydney Leroux
◆ Chrisitan McCaffrey
◆ Trae Young
◆ Sabrina Ionescu
◆ CeeDee Lamb
◆ Kemba Walker
◆ Drew Lock
◆ Ronald Acuna Jr.
Now, it’ll be interesting to see how CocaCola attacks the market. My guess is that this is just the beginning of the battle between Gatorade & BodyArmor. — Huddle Up (Online Newsletter).