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Life after Lance: FRS acquires contract manufacturer, shuffles management team

By Hank Schultz , 01-Feb-2013
Last updated the 01-Feb-2013 at 15:12 GMT

Photo courtesy FRS Company
Photo courtesy FRS Company

The FRS Company, makers of the FRS energy drink and related products, announced a series of corporate moves yesterday that included a management change and the acquisition of a contract manufacturing and formulation company.

The company announced the completion of the acquisition of Nutravail, a contract manufacturer with special expertise in chews, an area that FRS had also expended into recently.  FRS is privately held, and the terms of the deal were not announced.

The company also announced the departure of CEO Carl Sweat.  Current CFO Dave Henderson now becomes acting CEO, and Rick O’Neil, CEO of the newly acquired Nutravail, will continue on leading that company and will join the management team of FRS. The venture capital and private equity firm, Oak Investment Partners, and founder Tom Lines remain major investors in the company.

Another change:  The company will no longer distribute its products via Pepsi Warehouse Services, but will “pursue an independent distribution network, using a combination of direct sales and distributors,” according to a statement issued by the company.

Focus on quercetin

One thing won’t change:  The company remains focused on products built around the benefits of the antioxidant flavonoid ingredient quercetin, found in a wide variety of fruits and vegetables.

“The FRS brand is firmly rooted in the science of quercetin,”  Matt Kohler, chief marketing officer, told NutraIngredients-USA.

But the changes the company has made means it can expand its product offerings, Kohler said. In particular the company plans to leverage Nutravail’s chews expertise.

“Nutravail opens up significant revenue opportunities, particularly with soft chews,” Kohler said. “Their patented process allows us to put higher nutritional content into a chew, and they do so at lower temperatures which enables more nutritional content to remain.  This will definitely be an area of focus for the combined company.”

Life after Lance

The company launched in 2004 around a single product, the FRS Healthy Energy beverage, which includes quercetin, green tea extracts and vitamins. The company pursued a strategy of latching onto high-profile sports figures as spokesmen.  FRS now lists New York Jets quarterback Tim Tebow and US women’s national soccer team star Christie Rampone in its stable. The primary spokesman at one time, though, was Lance Armstrong, the US cyclist who has admitted doping and has been stripped of his seven Tour de France titles.

“Lance Armstrong lied to us, plain and simple.  Once that became clear, we immediately cut all ties to him, and moved on.  But we continue to be focused on the millions of consumers who love FRS.  Some are elite athletes from professional sports teams, but most of them are regular folks trying to lead a healthy active lifestyle,” Kohler said.

Incremental growth in energy category

FRS has expanded its product line over the years into the aforementioned chews as well as protein drinks and beverages offering immunity support.  It’s part of an attempt to  find some open niches to compete in the crowded energy product marketplace.

“FRS is a different type of product and appeals to a different consumer, so it’s highly incremental to the category,” Kohler said. “FRS appeals to a healthy, physically active consumer and is evenly balanced between men and women. Traditional energy drinks appeal to young men who aren’t particularly health-conscious.”

Little regulatory risk

Kohler said that FRS’s difference from products like Monster and Red Bull means the company is not overly concerned about the mounting pressure against energy drinks from government regulators, members of Congress or from high-profile wrongful death lawsuits.

“Many energy drinks are essentially ‘caffeine bombs’ loaded with caffeine, sugar, and other ‘stuff’ that can lead to jitters and a caffeine crash.  The people who are marketing those products should definitely be worried,” Kohler said. “FRS is different.  Our products use natural antioxidants to deliver sustained healthy energy.”

As FRS executes its reset, not everyone is sold on the strategy of building a brand around the benefits of single ingredient.  The risk, as with all ingredients, is that the ingredient itself and its benefits will become commoditized.

“I think it is a very difficult brand to understand. When they started nobody had quercetin. Now it is everywhere,” said beverage consultant Jim Tonkin.

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