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Ecommerce on Tap is a world where Supply Chain meets storytelling. Join Nathan Resnick and Aaron Alpeter each week as they offer insights into the backend of successful businesses. Brought to you by Sourcify and Izba Consulting!
Nathan [00:00:00]:
Welcome back to E Commerce on Tap brought to you by Sourcify and Izba. I'm your host Nathan Resnick, joined by my co host Aaron Alpeter. Aaron, for those that are joining us for the first time on E Commerce on Tap, do you want to give a quick overview of what we cover?
Aaron [00:00:20]:
Yeah. So on each episode, Nathan and I profile a well known company. We tell their founding story, reverse engineer their supply chain and talk about their exit potential.
Nathan [00:00:29]:
This season we've been covering supplements. Today we're going to cover Ghost lifestyle, which is a pretty cool kind of sports nutrition, pre workout type of brand. If you've been in the gym, you've probably seen Ghost. But before we dive into their story and their really impressive exit, was there any tidbits that caught your eye the past week?
Aaron [00:00:48]:
Yeah, there was one. So Unilever is selling the Kate Sommerville brand to rare beauty brands. And this is a business that Unilever acquired in 2015 as part of their Unilever Prestige group. One of the first businesses they acquired, they sold off the skincare business in 2021 and now they're selling the whole thing. And so I know that the Prestige team has been under a little bit of pressure trying to make sure the growth stays consistent. But if anything, I just think this underscores how difficult it can be for these strategic companies to purchase a celebrity brand and then keep it going post acquisition.
Nathan [00:01:26]:
Yeah, I mean, I think with these celebrity driven brands, a lot of it kind of goes through a hype cycle. Like I even saw. You probably saw the numbers behind Prime Hydration, right? I think was it last year? Two years ago they did like over a billion dollars in sales. Now they're pacing more towards 300 million in sales the following year. So they've seen a big drop off in sales and I think maybe part of that is just how do you kind of keep that momentum when you're celebrity driven? That's kind of the main face and endorsement behind what you're doing. I think prime has done well trying to expand and work with other celebrities, but at the same time I think it's extremely challenging post acquisition to navigate.
Aaron [00:02:09]:
Yeah, you're right. We'll kind of come back to Prime. I think that's a good counterbalance to what we'll talk about with Ghost today.
Nathan [00:02:16]:
Yeah, yeah. What I thought that was pretty interesting that was announced this week is all these kind of chatgpt apps. Right. So we talked a bit about how Shopify and OpenAI are integrating and we'll see what impact that has for Shopify brands. But now you'll be able to kind of create an app to search things on like Walmart or booking.com or whatever it may be through ChatGPT. And I think there's going to be some pretty cool use cases that are built through that. And I mean, ChatGPT has like 800 million monthly users, which is just pretty wild to think about. I think about, I think they said like maybe 5 or 10% of those of those are paying on the pro plan.
Nathan [00:02:54]:
And so I think it's just going to be really interesting to see how this is further integrated because I do believe in the next, you know, call it two years, there's going to be ads within ChatGPT and I think it's going to be a huge ecosystem for, you know, e commerce and all these larger, larger brands as well.
Aaron [00:03:12]:
That'll be really interesting. Do you think it's going to be like ChatGPT is going to be the new Google or is it going to be something different?
Nathan [00:03:18]:
I mean, we've already started to see some Google, you know, search volume decline just since ChatGPT has gone out. So, I mean, definitely, I think for me personally, right, if I think about my Google usage in terms of search, it has gone down because if there's something quick that I just want to kind of get a quick answer to and not really care as much about the citations, I'll just chatgpt it. I think I still like Google because I get to see the actual website that the news or information was reported on. And you could see that, I guess, through the chatgpt if you look at the citations, but it's just not as easy to do. That's kind of my quick take on it.
Aaron [00:03:57]:
Yeah, I think it's interesting. I kind of feel like LLMs, ChatGPT in general are kind of paralleling the supplement industry a little bit, where because of all of the hallucinations and kind of faulty stuff. I don't know if you saw this thing about Deloitte getting their hand slapped for basically making up a research project by using AI and they were quoting experts who wrote books in fields that they weren't experts in and just did all this other weird stuff. And so I feel like there's this, this growing distrust of what ChatGPT is telling you. And it's just like, you know, is this, is this actually true? Is this real? Did you make this up? And so it's almost like the supplement brands in the sense of there's really not a whole Lot of regulation in terms of what is good, what's bad and people are just using it. So I think that there's still going to be a place for validated websites in the sense of like Google and things like that. But you're right, if I just need to know something and it's not life or death, I'm probably going to ask ChatGPT versus ask Google.
Nathan [00:05:05]:
Yeah, yeah, definitely. I mean, we'll see how it plays out, but I think it's the first time there's been a major kind of competitor to Google search in a while.
Aaron [00:05:14]:
Yeah, we'll see if this ends up helping Bing. Obviously Microsoft and OpenAI have this partnership, but I wouldn't count Google out. I mean they've got a lot of resources and their best minds pointed at this problem as well. But it'll, it'll be an interesting kind of transition for the next, over the next couple years for e commerce businesses. I think the first two years of ChatGPT was just consumers and sentiment, people trying to figure out what this was. You saw things bleeding into marketing or other content creation. I think the next two years are really going to be about how businesses adapt because I think you're right, like people will be able just to purchase directly from ChatGPT. And what does that mean? Right.
Aaron [00:05:52]:
How does that impact their day to day?
Nathan [00:05:54]:
Yeah, totally. Totally. Well, a few seasons ago we did a deep dive on Athleisure and I think Athleisure has kind of grown in this category that was at first really for people that were going in and out of the gym. But now Athleisure's turn into something worn all the time. Right. I mean, I'm wearing a Vuori hoodie right now. It's the Athleisure brand that we covered. That was a really cool episode.
Nathan [00:06:18]:
And you know, I think it's just so interesting how in many cases these Athleisure brands were built on influencers and this kind of aesthetic. And as I went through the ghost lifestyle story, it reminded me of that Athleisure season because as we'll see in the ghost story, they are, you know, it started by a bodybuilder and his friend, right. Really kind of starting thinking around performance. And it's now transitioned into this kind of lifestyle brand where they've got, you know, a sports drink, they've got, you know, different supplements, they've got a lot of other products that, you know, if you're not a die hard bodybuilder, you would still take. Right. And so I Think that's kind of crossed the chasm a bit in the same way that a lot of these Athleisure brands started with more of a, you know, focal point on a certain niche within fitness, like whether it be Lululemon and yoga or, you know, Yori and those board shorts they first started with. So I think it's just pretty interesting to see how that playbook has translated to this story at Ghost Lifestyle. Did you see some similarities as I mentioned that?
Aaron [00:07:26]:
Yeah, I think the Athleisure comparison is a really good one for Ghost and supplements in general. I mean, kind of like what you were saying. I would characterize most Athleisure brands as people who maybe aren't working out, but they want to appear to be the people that could definitely be working out soon. So it's more about like this aesthetic of, you know, this, you know, I'm an active person, right. That, that's kind of why you're wearing those clothes. Most people are not wearing them to the gym. And there's, there's something about this near flawless influencer being sweaty that gives an authentic feel that helps people who don't look like them say, oh, they're just like me or I want to be like them. And when you're, when you're selling Athleisure, you're really not selling the specifications of the product.
Aaron [00:08:10]:
You're not saying, oh, here's the tensile strength and, and here's the moisture wicking ability, but it's really selling an identity. And the episode today is going to talk about how two founders took that playbook and applied it to the supplement industry to make one of the most impactful examples of influence related community building. And for those who don't know, just to skip the end, we're talking, you know, this is Ghost Lifestyle. They sold a 60% stake to Keurig Dr. Pepper for almost a billion dollars in 2024. And so I think this is going to be a really fascinating episode in terms of this core tension that supplements are dealing with. Is it about science and molecules? Is it about aspirations and followers?
Nathan [00:08:47]:
Yeah. And just quick shout out for those that are joining for the first time on E Commerce on tap. Aaron and I listen and review every single comment. So leave a review, share it with a friend. We always appreciate you spreading E Commerce on tap to those that could benefit from these different stories of.
Aaron [00:09:05]:
So let me just kind of keep going about the influencer nature of the supplement space because I think if you take a step back and if you've Listened to the category kickoff that we had a couple of episodes ago. The supplement industry has always been about influencers in one way, shape or form. But who those influence are has changed over the years. So if you think about this, in the early 20th century, the influence were primarily doctors and medical professionals. These people knew something that you didn't know. And if your doctor said, hey, I think you should take this fish oil, they'd say, okay, sure, whatever you say. You're the doctor. Well, through the 30s and 40s, it turned into more gyms and athletic performance supplements to help really serious athletes recover faster and perform better.
Aaron [00:09:50]:
Those were the sorts of claims in the 70s and 80s. This is where you start to see the beginning of the modern influencer movement in the supplement industry. So this is bodybuilders, fitness gurus think the Arnold Schwarzenegger types is what's there. And you know, there are a couple people that put influencers and supplements on the map. Vince Garanda, who was a bodybuilder and a trainer, he not only promoted diet and supplementation practices, so you know, eating desiccated liver or amino acids, but he ran a mail order nutrition and supplement business and published training and diet manual. So, you know, kind of the first E commerce business before there was any E in front of it. Bob Hoffman is another one. If you're studying this space.
Aaron [00:10:31]:
He was a really good example of someone who combined influence, appeal and product. He owned York Barbell and published the strength and health and muscular development magazines and sold supplements through his channels. So that's kind of how it was for the first 50 years. But then with the advent of YouTube, you see this rise of these YouTube personalities in the 2000s, the 2010s, and you had lots of Internet personalities that were there to show you how to get shredded. And they did workout videos and kind of talked to you about, hey, we're going to do 1,000 sit ups in front of your TV and oh, by the way, take my supplement because it'll help you melt fat faster or things like that. Since 2015, there's been another shift where we're really in this era of actual wellness influencers. So these are people who build their entire followings around things like nootropics or daily vitamins or everyday powders. And there's a couple of examples I'll point to.
Aaron [00:11:29]:
So shreds. I don't know if you know this company, but they are kind of this classic Instagram marketing agency made a supplement company story and they leaned very heavily into social proof. So they used models, they used before after images, really a lot of lifestyle positioning and they built hype anesthetics before really creating any sort of differentiation in their product. And more recently, you see a lot of non fitness influencers entering the space. YouTuber Rebecca Zamolo launched a fertility supplement brand which is leveraging her massive follower basis through that. And so I think it's just interesting that my perspective is that supplements have always been about influencers. It's just who those influencers are has changed to a point where there are whole people whose entire identity is being a health and wellness influencer.
Nathan [00:12:20]:
Right. And I think there's a bit of a reason for that. Right. As I think more about why influencers have had such impact on supplements, there was kind of a few reasons that came to mind and I think it's useful to double click on this because I mean, I just see so many of these YouTubers or Instagrammers that are launching their own supplement brands. I think there's a real kind of rhyme and reason behind that. So, you know, number one, what comes to mind is that it's just a much lower barrier to enter the market compared to, let's say, a pharmaceutical or medical device. There's just a lot less regulatory burden. And I think number two, if you look at the supply chain, there's so many more providers where you can white label or private label products that are already on the market.
Nathan [00:13:06]:
So you can hit up a cm, a contract manufacturer that might have an existing catalog that you literally just put kind of your branding and label on. And then the main kind of differentiator from yourself and your competitors is really just your branding and your packaging and your storytelling and a lot less about the R and D. And then I think this space is really booming. I mean, here in Utah, for example, we have a ton of supplement manufacturers. I mean, I know Bloom Nutrition as an example, has a facility here, a large facility. And so I think there's kind of just this easy to kind of, I don't want to say copy and paste, but easy to kind of, you know, white label and, you know, create your own brand around. And I think this space is really good for influencers because there's, you know, so much visual proof in terms of how you can incorporate these products into your content. Right.
Nathan [00:13:56]:
And so unlike, let's say, you know, a service where you might not have as strong visuals with supplements. I mean, you see, for example, if you go on, you know, Ghosts, Ghost Lifestyle's Instagram, you see kind of their influencers Taking their pre workout before they go to the gym and you see their protein powder after they work out. And so there's a lot more visual proof here. And I think the beauty of the supplement industry, which makes it really attractive, is the repeat purchase rate.
Aaron [00:14:26]:
Right.
Nathan [00:14:26]:
I think once this kind of supplement stack becomes part of your routine, whether you're always taking this pre workout or always taking this, you know, protein powder after you work out, the repeat purchase rate is very high and it becomes part of your routine. Kind of, you know, reminds me of our skincare season where, you know, once a brand becomes part of your routine, you really kind of win that customer. Right. And the lifetime value extends and, you know, that's really how you're able to scale a lot of these brands. And I think in fitness in general, there's kind of like this, you know, community tribe dynamic. It's very social. Gym goers often are obviously sharing tips and their transformations and protocols that led them to their physique. And I think that's how you can really easily integrate these supplements into your influencer LED content.
Nathan [00:15:18]:
Right. And so I think that in addition to social proof and just being able to easily integrate, integrate these products, make supplements and influencers kind of the perfect match. It's been pretty incredible and just kind of eye opening to see the amount of influencer led, you know, fitness or supplement brands that have been been launched. I mean, I would guess if you go on any kind of fitness or bodybuilding page, they're sponsored by or running their own, their own supplement. I mean, even, you know, Chris Bumstead, who, you know, won the most Mr. Olympias, you know, the past decade, incredible bodybuilder now has his own fitness brand called Raw Nutrition where he has pre workout, post workout protein powders. You know, it's really just a great match for these influencer led or for him professional bodybuilders to even have their own brands here.
Aaron [00:16:16]:
Yeah, I completely agree with that. And I love how you walk through and you're right, this industry is primed for influencers. That's kind of where it always started from. And it's just, it's so easy for people. I mean, this would be the definition of a red ocean, right? This is, this is always gonna be very competitive. And as you're talking about the tribe dynamics, I'm kind of like, where's the CrossFit branded supplement? Where's the peloton branded supplement? It feels like those are huge opportunities for those tribes to monetize in a different way.
Nathan [00:16:48]:
Yeah, I mean, I'M sure there's a CrossFit one. I wanna say there's one called Pro Mix that is tapped into the CrossFit community. Maybe just you and I are not regular CrossFit gym owners, you know, and I don't know about peloton, but you're right, I mean, they probably could have extended into some sort of, you know, supplement for spinning and cycling a lot, a lot more efficiently. So, you know, I think there's one kind of red flag that I see with this that I think more and more people are becoming aware of and because there is a lot less regulatory hurdles here, you know, the kind of ethics around the content that's being created with these influencers and how it's being shown and maybe, you know, some of these benefits are being overstated. Right. And I think especially, you know, as I've looked into some of these brands and seeing their growth on platforms like TikTok Shop, where, you know, a lot of these influencers, because they're driven by affiliate commissions, are really kind of almost just saying whatever they want to try to drive sales. Right. Because they are commission led.
Nathan [00:17:49]:
And so, you know, I think there's a real, a real gray area there in terms of, you know, the claims that are being made with some of these supplements. Right. And I think that's kind of a line that a lot of times has been crossed with some of these brands and there's, you know, no kind of body that's overseeing the claims that are being made by some of these supplement brands in terms of, hey, you know, I took this after I worked out and lost, you know, X amount of pounds or, you know, this pre workout got me jacked or, you know, whatever it may be. But I just feel like a lot of these ads that I've seen have made pretty substantial claims that, you know, could be questioned when it comes to their ethics. Really?
Aaron [00:18:33]:
I think you're absolutely right. I mean, this is, this is such a core issue in the supplement industry. And we met another brand a couple weeks ago who was coming in and was looking to save some money on their manufacturing. They were talking to sourcify, we gave them a quote and gave up. And they said, hey, this is too high. And then we did the lab testing and it turns out that even though this company was doing very, very well, millions of dollars in sales, they didn't have any of the active ingredients that were on the bottle. And so it's just like, well, I don't know what to tell you. We can make what you've got now, but it's not what you're selling.
Aaron [00:19:05]:
And a lot of the stuff is just people who, you know, either don't take the time to audit their suppliers or don't take the time to audit as consumers. And I really think that in this era of deepfakes and AI and misinformation, people are becoming a lot more skeptical of advertisements that they see online, just in general. And I think that the pendulum is going to start to swing more towards curation. And so, you know, it's going to be really important that I know someone who had firsthand experience with this. I'm going to place more emphasis on a friend or a family member who took something and it worked out well for them than maybe something I'm going to see online, even if it claims to have scientific backing or things like that. And so I guess the question for you, Nathan, is do you see this as driving more of the influencer led growth and accelerating the supplement industry even faster or is it something that is not going to help in that way?
Nathan [00:20:06]:
Yeah, it's a good question. I think in general, for example, you look at David protein bars, they've had a really strong influencer led strategy. There's been a lot of questions around their main ingredient, epg in terms of is that actually the best way to intake protein? And that's why the macro is on their bar. Have been able to kind of surpass the industry standards in terms of what makes a great protein bar. And so I think that's something that everyone needs to do their own research on. You can have a David protein bar and just see how your body reacts. I'm not going to say it's good or bad for you. Everyone kind of reacts differently to these different ways of taking supplements.
Nathan [00:20:44]:
And so, you know, I think at the end of the day there's definitely some science that's being pushed and definitely some claims that are being pushed as well. But as a whole, I think, you know, it's for the better. But we're definitely going through this protein trend where, you know, there's protein chips, there's all sorts of protein cereals. You'll see Ghost Protein even partnered in, launched a protein here. And you know, I just think it's really fascinating because this in large part is, you know, kind of enabled Ghost to grow. I mean, they've had a great influencer strategy, they've had an incredible licensing strategy and their story really starts in 2016 with Dan Lorenko and Ryan Hughes. And I mean Dan, he was trained as a Pilot, Right. He went through flight school, worked as a private pilot.
Nathan [00:21:31]:
It sounds pretty cool flying around other people's jets and working these chartered flights. But for him, he kind of describes that being on call as a pilot kind of restricts his personal flexibility. And so after a breakup in his mid-20s, he, you know, decided to change course and eventually found his way as the VP of marketing and product development at nutribull, which, you know, we know pretty well as well. And you know, I think working at an established supplement company gave him exposure to product manufacturing, you know, regulation and kind of the insider view before launching his own. And he teamed up with Ryan, who, you know, was his co founder. That came really from the bodybuilding and performance world. You know, Ryan was a personal trainer and kind of an influencer in his own right, sponsored by, you know, several well known supplement brands, including Lambia, which, you know, is one of the largest sports supplements brands in the markets. And he, you know, likes to market himself as a former professional bodybuilder turned cmo.
Nathan [00:22:31]:
So he really knew the fitness industry inside and out. And that's kind of where the, you know, credibility and physique helps lend Ghost to its legitimacy within that community. Especially early on when people realize, realized, you know, who was behind Ghost. And I think that's kind of where, where both Ryan and Dan, you know, were able to establish Ghost together and decided to start Ghost because they had kind of these common interests in fitness and wanting to, you know, progress themselves forward. They had common goals and values and they wanted to, you know, start something that was kind of more than just a lifestyle sports nutrition brand, but not like overly focused on bodybuilding. And so they framed Ghost kind of almost more as like a passion project rather than just a business. They wanted to do something that was fun, bold and authentic. And I mean, they decided on the name Ghost more of as a reference to being behind the scenes because if you look at Dan and Ryan, their backgrounds professionally, they had both been behind the scenes at larger brands before and they wanted to shift into something more visible.
Nathan [00:23:42]:
And so yeah, I think it's just, it was kind of more of a mission almost to them. And it seems like almost they were having fun as they built this and as they went about founding this rather than just setting out to launch a business, really, I felt like they really kind of had a passion for this as I looked more into their story.
Aaron [00:24:03]:
Yeah, as you're talking about that, I'm reminded of our episode that we did on vacation, the sunscreen company, where it was all about the vibes, right? They had the vibe, they had the brand, they had the aesthetic first before they even know what they're going to sell or how they're going to do it. And it does seem that Dan and Ryan were this perfect match between a business insider and someone who already has a lot of credibility in the space. How did they go from idea to actually launching the product?
Nathan [00:24:33]:
Yeah, I mean Dan's connections in the industry and Ryan's kind of cachet opened a lot of doors, sped up the process. They kind of knew who was who when it came to the supplier selection process. They started with just two products, so a pre workout and amino acids which are kind of more for hydration and boosting electrolyte powders after you work out. And I think they, they launched kind of just like a typical D2C site initially that felt like one of the hundreds of other influencer founded supplement sites. But I think what was special about Ghost is that it emphasized its branding, design and content from day one. You know, not kind of purely their product, you know, technical claims, but I think they made a really strong strategic move early on and that was in order to stand out, they took a licensing route which I thought was just an incredible move. So their first big licensing collaboration was with Warheads. Do you remember Warheads? The kind of sour candy as a.
Aaron [00:25:40]:
Kid candy brand partner with a candy company?
Nathan [00:25:44]:
Yeah, I mean I feel like everyone that's had a warhead, you know what a warhead is, you know, and so.
Aaron [00:25:49]:
If you know, you know.
Nathan [00:25:50]:
Yeah, yeah. And so they launched the Warheads sour Watermelon Ghost Pre workout in December 2016. And this is I think really what started to put them on the map. Right. Because before this licensing arrangement they were, you know, they had strong products, you know, people in the industry knew them, but they, they weren't on this growth trajectory before they started licensing, which I think was an incredible strategic move.
Aaron [00:26:18]:
Yeah, well, what it did is it gave the consumer a reason to choose their protein power, their pre workout as opposed to any of the other ones that may have the exact same ingredients or claims. And it was really this also as you're talking about a signal that they were going to lean into flavor from the beginning. And I think that as we were going through the research, I mean the Ghost Warheads collaboration was really the industry's first candy supplement co branded effort. And it gave, I mean, because they went with Warheads, it wasn't just like it, you know, tasted like sour watermelon because they actually licensed, they could Use the Warheads logo on the label, which I think is huge, because here you are, you're an unestablished brand, you're new. You know, you may be in a sea of everybody else, but being able to use something that has nostalgia, something that other people recognize instantly is like, oh, this is interesting. And I think that this not only gave them the exposure and fitness that they were going to have anyways because of of who their founders were, but helped them reach a new demographic. From Warhead's perspective, they saw this as upside in their brand. They get licensing, royalties, they get co marketing.
Aaron [00:27:27]:
It allows them to bring in new consumers into their ecosystem as well. And so I think this is just such an interesting idea and it underscores how even if you're looking to do what could be considered a Me Too product, you don't have to have a Me Too brand new. And what, like, what was the impact of this collaboration?
Nathan [00:27:46]:
Yeah, it was really their breakout moment. It was a huge content driver with tons of pr, social proof and just a way to attract new customers. And so it just generated a ton of buzz. They didn't publish their business metrics in the early days, so, you know, we don't quite know exactly how fast they grew, but you know, it looks like they grew like a rocket ship here. I mean, suddenly they had a business that was growing and scaling and all those growing pains you can imagine, and they started hiring pretty fast and growing a really strong team. And so in 2018, just two years after they launched that collaboration, Mondelez, which is one of the biggest owners of snack brands in the world, Oreo, Chips Ahoy, Sour Patch, Swedish fish, you name it. Some of my favorite candies out there. They signed a seven year licensing partnership with them to give them access to all those brands.
Nathan [00:28:40]:
Right. And so you can just imagine this kind of upstart supplement brand having this initial Warheads launch and the rocket ship they were on with that collaboration and then turning that into a really strong, long standing licensing partnership. Huge strategic move there. And so they leaned into this, right? In 2019, they launched the Chips Ahoy flavored Whey protein. They just continue to launch like Oreo flavored Swedish fish flavored Nutter Butter flavored proteins. And you know, if you look at some of the Reddit threads, customers absolutely love this idea of kind of having the kind of candy oriented taste in their product as a pre or post workout. You know, obviously it didn't actually have candy in it, but the flavor profile was, was supposed to be the same. And you Know what was kind of crazy is this actually led to a lawsuit in 2022 where a customer advocacy group, they sued them claiming that candy flavors targeted children.
Nathan [00:29:43]:
But, you know, the court ruled in ghosts favor and said that reasonable people, you know, wouldn't expect that because, you know, I guess this advocacy group was saying, hey, these Oreo flavored whey proteins, Oreo kids are going to start taking whey protein too early. But, you know, hey, I think it was a really strong strategic move and, you know, really put Ghost on the map, that's for sure.
Aaron [00:30:05]:
I think I'm going to start doing that where instead of packing Oreos in my kids lunch, I'm just going to put scoops of protein in there and that'll be good. I mean, this almost feels like cheating. I mean, you get to eat candy as part of the workout. And it's really interesting because they struck this nostalgia area by going with these legacy, familiar flavors that people had and combining it with something that, let's face it, usually just tastes healthy. When you have protein powder or any sort of supplement, you're like, okay, this tastes like healthy. It's not the greatest thing ever. And I think that the other smart thing that they did is that by partnering with these hundred year old brands, they put their brand on par with them. Because there's a certain level of vetting that Mondelez is going to need to do before they say, yeah, we're comfortable letting use the Chips Ahoy logo.
Aaron [00:30:55]:
But I mean, just think about the credibility and the, you know, we're talking about at the beginning, people not trusting what they see and, you know, looking for an influencer. Well, what better influencer do you have than a 150-year-old brand that says, oh, yeah, this is our stew? Because the people probably were thinking of this early on as, oh, this is the Chips Ahoy protein. Right. This isn't necessarily the Ghost who branded protein, it's the Chips Ahoy protein. And so that's what we're looking into. But, you know, at the top of this episode, we talked about how Ghost was a lifestyle business and, you know, wasn't specifically a supplement business. How do they expand into these other verticals where we can truly call them a lifestyle business?
Nathan [00:31:37]:
Yeah, you know, I think in order to expand, similar to how we've seen in other seasons, other brands expand their product line. I think typically most of these breakout companies that we've covered has like one or two SKUs that really put them on the map. In Ghost case, it was their warheads pre workout and Dr. Squash's case, it was their, their soaps and now they have, you know, shampoo and deodorant. And it's a similar playbook that we've kind of seen executed again and again in terms of trying to integrate your products with other parts of your consumers day to day. Right. So in Ghost's case, you think about breakfast cereals or protein bars for a snack and they created these products to align with their customer's identity, but in effect basically monetizing more moments in their day beyond just pre workout and protein. Right.
Nathan [00:32:34]:
And so I think on one hand they realized that kind of supplement pre workout market is saturated and a bit fragile in terms of claim risks that we mentioned before and regulations that are coming into play. But the kind of beverage and food categories have even higher frequencies, more impulse purchase decisions, better shelf velocity in retail and wider awareness. And so I think they saw this as a higher upside potential and it made sense for them to expand. And so with that insight, they decided to really expand dramatically beyond what any other kind of supplement brand has done historically. Right. And I think what was pretty unique is that they looked at their, one of their retail partners, gnc, they looked at GNC sales data and saw that energy drinks were oftentimes being purchased alongside Ghost supplement products. And so, I mean, I think this is a really pretty amazing move by their team to actually look at the data themselves and then go into an energy drink. And they launched Ghost Energy, the beverage arm in 2020 through a partnership with AB InBev and they distributed cans at festivals across retailers.
Nathan [00:33:56]:
I mean, they signed deals with over 20 different major music festivals. And so they kind of continue to push this on prem presence across events that really, I think put Ghost in their Ghost Energy brand top of mind. And I mean, I kind of want to double click here and just ask what comes to mind in terms of other brands that have strategically expanded the product categories like Ghost has in this instance. Right. Because I feel like we've seen that quite a lot on E Commerce on tap as we've covered brands across these different categories.
Aaron [00:34:34]:
Yeah, I mean, there's several we can get into, whether it be, you know, I go back to merit and versed beauty and kind of how they went from skincare into cosmetics with a different company. But you know, as I think about this in particular, this was a supplement brand that for all intents and purposes turned into a beverage brand. And I don't think we've seen this much of a transition in this way. I mean, can you Think of anybody?
Nathan [00:35:01]:
No, not off the top of my head. I mean. And they continue to launch different products, right? So like they launched Ghost hydration in 2024 to compete with prime, obviously. And I mean, they just continued to roll out these different product categories. Like in April 2024, just over a year ago, they entered the cereal aisle with a exclusive high protein cereal partnered in collaboration with General Mills. And they just kind of continue to expand into these different categories. Right. I mean, even just earlier this month, they announced the Ghost protein bar.
Nathan [00:35:38]:
And so they continue to kind of deliberately push into more food and snack and beverage spaces rather than just supplements for people that work out, right?
Aaron [00:35:52]:
Yeah. And again, this is either a brilliant strategy or a terrible strategy, depending on your execution. I think there's this real balance that has to be struck between diversification and dilution of focus. And so do you think that this playbook that Ghost employed of kind of looking to see what other people are buying and just saying, well, we can make that too, is that something that you think more people should be doing or is it they're the exception to the rule and it would just be a distraction to everyone else?
Nathan [00:36:24]:
Yeah, it's a good question. I mean, my kind of gut take is that there becomes a moment in a brand's life cycle where you kind of cross the chasm, right? You kind of go from very niche, niche focus of, hey, we're, you know, protein bars for crossfitters after they do a workout of the day, right? And then you kind of expand from that niche, niche focus and start expanding across SKUs across product categories. And I think one key aspect of Ghost's approach was looking at sales data and gnc, right? That was kind of their first strategic move in terms of product expansion. And then a lot of their other expansion has been through partnerships with General Mills or other players that have help with distribution, like their Hydration brand with AB InBev. You can only imagine the distribution powerhouse that InBev has, right? And so I think there's been a lot of strategic partnerships and data driven decisions that enabled them to, to make those moves. But you know, even if I look at, for example, what's happening right now with, with Bloom Nutrition in terms of how they started as kind of a green supplement and now they have a pre workout and they have gummies and they have just so many other products under their umbrella, I think there's kind of this moment in a brand lifestyle where they cross the chasm and can start launching into other product categories very successfully. And so you know, I want to. I want to.
Aaron [00:37:55]:
Like, I think you're absolutely right there. I think that is so insightful. I would. I would argue that there's probably two chasms that goes crossed. The first one is if you're an influencer brand, you have to go from, you know, being about the founder to being about the brand. And like, I think like Hailey Bieber and Rode. Right. A very good job of, yes, it was a celebrity brand, but it crossed over and it became a brand on its own.
Aaron [00:38:21]:
That's a really hard thing to do because if the founder goes away, you want to make sure you have an asset or something that's worth buying. The second chasm is how do you go from a brand to a master brand? And I think that's what you're talking about. And I think about, like, Dove, they started out as a soap company, but because they had so much brand equity and soap, when they came up with other cleaning ideas or other personal care ideas, whether it be shampoo, conditioner, lotion, deodorant, like, the consumer's like, oh, yeah, I trust these guys. Let's go and do it. And so I think you're absolutely right here, where there are very specific things that have to be done to help get the consumer to say, okay, I trust this influencer first. Right. And that might be more of a guerrilla marketing or influencer piece, but then it has to be, okay, yes, there's influence there, but maybe I got introduced to it by the brand, and now I trust this brand and, oh, they've got something new. Let me try that.
Aaron [00:39:14]:
And now I just know that anything from Ghost is going to have a certain brand promise, and that's what I'm going to do.
Nathan [00:39:19]:
Yeah, yeah, 100%. So what was the kind of specific playbook that you took away from Ghost in terms of what they employed to kind of test things out and expand across categories here?
Aaron [00:39:31]:
Yeah. And I think this is the part that for our listeners, you know, you can write down if you wanted to have a similar outcome as Ghost. I think the first thing is they focused on brand LED scaling. So just as we were talking about these chasms and building that brand capital, they wanted to make sure that when they launched something that they were launching their brand that happened to do this thing, it's not just another protein bar. It's a protein bar that has a very distinctive Ghost flavor. Ghost twist. So Liquid Death, another one. Great example.
Aaron [00:40:00]:
Yes. They're selling water. Very different type of water. People are expecting a certain type of brand Awareness or just advertising because it's liquid death. The second thing I think they did really, really well is they tested things by doing DTC first and then moving into retail. And that allowed them to have limited runs to basically validate demand. And then they convinced their retail partners to say, hey, yeah, even though we started as a supplement company and you may be stocking our, our energy drinks, we actually think a cereal is going to do really, really well. Not because we're good at telling you things, but because here's the data of our consumers who are now in the cereal aisle who are purchasing it.
Aaron [00:40:41]:
And by the way, they look different than your existing cereal consumers. And then I think the other thing that they did was they looked at this in terms of what's the occasion based thinking that we can look at what's the occasion that our consumers are going after so that we can innovate that way. So rather than having just all candy flavored whey protein, which they could have done, I mean, there's lots of. They could have Tootsie Roll flavored whey protein. And I don't know if anybody likes Tootsie Rolls, but like, that would probably sell some degree of it. But they looked at it and say, okay, we have something for pre workout. Could we have something for in the morning or an indulgent snack? And so they looked at these things because their calculus was, if I can attract the consumer to my brand, I can sell my brand in lots of other times throughout the day. And that really is what led them to creating this platform, to positioning Ghost as truly a lifestyle brand and not just a supplement brand.
Aaron [00:41:39]:
And the more product lines that they own, the more that they can own that consumer ecosystem, which is what's interesting.
Nathan [00:41:46]:
Yeah, No, I agree 100%. And those are some really strong takeaways. I mean, in some ways, this kind of reminds me of the Shinola episode where we have a watch company that made a $3,000 bike, not to sell a lot of bikes, but to actually showcase the craftsmanship of what they do. Right. And I think Ghost was kind of looking at this in a similar light and questioning what can we do that is going to not necessarily make our business even bigger by doing these things, but enhance the lifestyle and be good culture moments and talking points to expand the growth lifestyle. Right. And so I think there's been a lot of brands that have taken this approach of, you know, launching products either to create buzz or to create more awareness or to showcase something special about their products. I mean, are there any quick takeaways or moments that come to mind with brands that have done that in a similar way to Sonola?
Aaron [00:42:43]:
Well, I think I would look at Shinola as the exact playbook or example of what you should do. Where I think a lot of brands run into problems is they launch something new because their hero product has stalled. Right? Like their growth is not as fast or robust as they want it to be. The revenue isn't compounding the way they expected. And so like, all right, we're going to go launch a supplement, we're going to go launch apparel, we're going to go launch. Fill in the blank here. And I think that those are more grasping at straws when in reality, instead of trying to launch a whole nother business line, you should be working on the one that established the brand and doubling down on that so that that's where your marketing efforts should go to. What Chenola did is they intentionally said, look, we are not a bike company.
Aaron [00:43:29]:
We're not going to do a whole. We might sell 20 bikes a year and that's okay with us. But the intention said we're going to do this thing that's going to be highly visible. People are going to write about it, we can point to it. You think about just a beautiful bike and something you can experience. That way, you interact with that in a different way than you would a watch. The same way that you would get on a bike, you want to put on a watch. And that's how that works.
Aaron [00:43:50]:
That's my thing is I think that the right way to do this is say, let's make a small bet. Let's not try to bet the whole company on this new initiative. If it becomes a company changing initiative like the energy business did, then that's awesome. But we're not going to start there.
Nathan [00:44:05]:
Yeah, I agree. I agree completely. And you know, it's reflected in their financial performance, right? So late last year, you know, Keurig, Dr. Pepper paid about 990 million for 60% of Ghost, about a $1.65 billion valuation. This structure also included them acquiring the remaining 40% in 2028, based on Ghost's 2027 performance and KDP. They publicly said they're going to invest about $250 million to integrate distribution systems and help expand Ghost. And so I think there's kind of a few things we can infer from this acquisition price at the time is that I think Ghost sales in 2021 leading up to the acquisition were probably about anywhere from 30 to 50 million. Later statements in 2024 said they had quadrupled sales over three years.
Nathan [00:45:01]:
So that would put them at about, call it, I don't know, 120 to 200 million in revenue in 24. And so 24 was this massive year of new product category and brand expansion. And at the time of the acquisition, the CEO of KDP mentioned that Ghost was doing nearly half a billion dollars in revenue. And so, you know, I think just an incredible growth trajectory in terms of being able to triple or quadruple revenue, you know, every year, you know, leading up to that position. I mean that's just an incredible, incredible growth trajectory.
Aaron [00:45:39]:
Yeah, and I think it's really interesting that, that it was Keurig Dr. Pepper who was the one to buy Ghost, not one of their co marketing partners like I could have very easily seen. Oh, Mondelez is going to purchase this or AB InBev who's running their beverage supply chain would be the one to buy it. Why do you think that Ghost fit well into KDP's portfolio which they're known for? Soda and coffee?
Nathan [00:46:05]:
Yeah, I mean I think they were kind of facing this big beverage problem where energy and functional beverages are the fastest growing segments in the industry. And most kind of innovation was coming from founder led insurance insurgents like Celsius prime, not kind of these legacy companies. And so they had a gap in their portfolio from what I could see in terms of that things weren't coffee or soda. They were now more into this functional and energy driven beverage space. And so they were looking for an authentic brand that they could really kind of plug into their playbook and distribution. And so that was kind of some of my takeaways. I mean, why do you think this was a fit for them?
Aaron [00:46:52]:
Yeah, at first I was scratching my head, I was like, I don't really get this one. But you think about what you're saying where they have this gap in their portfolio, but they also needed another type of muscle. And so Ghost has this built in virality. Anything they launch people are going to try because there's always this unique twist. And so they make, through their licensing deal, they make things visible in a way that most supplementary energy brands could never do. I think that there's also a world where because Ghost has already tapped into gym goers, gamers, content creators, those sorts of things that that will be an easier way for KDP to access those consumers and potentially start to cross sell some of the other brands that they have. But I think the big thing here is that Ghost has a halo effect on it. It's not a beverage, it's not a supplement, it's a batch, it's a brand.
Aaron [00:47:44]:
When people see that you have a Ghost branded thing, typically younger consumers are going to see this as a way of self expression. And because of that, this gives Keurig Dr. Pepper the ability to try all sorts of different ideas. I mean there's probably a whole vault of interesting snack ideas, interesting beverage ideas, interesting food ideas that they've said, hey, you know, our research shows that this would do really well. But are they really going to Launch like a Dr. Pepper Flavored Potato chip? No. Could they launch a Ghost flavored potato chip? Absolutely. And so I think that there's this, this piece here where it's.
Aaron [00:48:19]:
Yes, there. The underlying business is attractive and it's growing, it's new consumer. But I think it's this license to go and do something off the wall. That has been the whole essence of what Ghost is. That was really the thing that made Curry Dr. Pepper want to buy it.
Nathan [00:48:34]:
Yeah. And I mean there was a lot of things that happened, you know, pretty much right after the acquisition. Right. So one of their biggest or their biggest licensing partner, Mondelez, sued them in early 2025 basically claiming that their licensing agreement had expired and was voided because of this acquisition. And so they claimed that Ghost had to halt, you know, the sale of any and all co branded products. And the court was going to have to destroy all of the co branded products that they had. And so Ghost of course pushed back and over the summer they came to an agreement that was a soft landing where they would allow them to sell the remaining inventory but discontinue the co branded products going forward. So a big shift in the product strategy.
Nathan [00:49:23]:
And I think another interesting element of the acquisition was their supply chain. Right. So Ghost doesn't own any factories themselves, they work with contract manufacturers. And so the sale doesn't impact necessarily those co packers. But when KDP acquired ghost, AB InBev's position was naturally affected just based on distribution. So KDP plans to pay 225 million to AB InBev for the transfer of ghost distribution in Q1. They paid that and you know, in March 2025 this was handed over from ABM BEV to KDP. So you know, a lot kind of changing there on the distribution side.
Nathan [00:50:05]:
But in terms of, you know, manufacturing they work with, you know, contract manufacturers so it wasn't directly impacted. But it's, I mean pretty incredible story, you know, very interesting, you know, rise and some strategic moves here that really stuck out to me, I guess. As we wrap up this episode, what are some of the most interesting takeaways for you about Ghost?
Aaron [00:50:29]:
Yeah, I think it's just this narrative of how a supplement brand was acquired by a soda company, and I think it just goes to show you how impactful it can be to try new things, to pivot and to really do things in a different way. For me, I don't know if this was the plan that they had when they started the business in 2016 to sell to Keurig Dr. Pepper, but it was just a good reminder to always preserve optionality, to try different things and to not say no to crazy ideas because they could end up transforming the business into such a massive way. I mean, this business could be popular as a supplement brand and I'm sure they could have lots of candy flavored supplements, but because they moved into things, most people would probably look at Ghost as a beverage company today because that's at least where you're going to see most of that advertising in retail.
Nathan [00:51:16]:
Yeah, that's for sure. I mean, I think strategically they made some key decisions here. Licensing obviously put them on the global roadmap of supplements and they executed extremely well with that approach. So, I mean, incredible story, amazing outcome for the team here at Ghost. And I think this was an amazing episode of E Commerce on Tap brought to you by Sourcify and Izba. If you haven't already subscribe Leave a Review Share with a friend and we really appreciate you tuning in to this episode of E Commerce on Tap.