The restructuring of Twinlab is complete, as the entity Twinlab Consolidation Corporation has concluded its first deal, the acquisition of Twinlab Corporation itself.
In plain English, that means: “We have uncoupled Twinlab and recapitalized it within the new entity,” CEO Tom Tolworthy told NutraIngredients-USA. Tolworthy led the management buyout of the corporation and helped arrange the new financial backing.
New capital, new outlook
“Now that we are recapitalized, with some of the same management and some new managment, we can take a look at the future,” he said.
Twinlab, one of the iconic names in the dietary supplement business, has struggled through some very rough times. When Tolworthy took over Twinlab in 2011, the supplement brand was in a recovery mode from its bankruptcy filing in 2003. Now, with the company growing strongly, Tolworthy is looking at the next phase in the company’s lifecycle.
“The old Twinlab was overleveraged and undercapitalized,” Tolworthy said.
Tolworthy had help in the restructuring from Capstone Financial Group acting as an advisor in the effort to raise $130 million in capital. George Schneider, president and chief investment officer of Capstone, said one of the chief considerations of the deal was Tolworthy himself. His reputation for turning around companies and positioning them for future success is unparalleled, he said.
“The turnaround that Tom Tolworthy and his team have accomplished is nothing short of astounding. They have reduced debt, they have rebranded, they have launched new products. It is in keeping with his past experience at Barnes and Noble and Vitamin Shoppe,” Schneider said.
Selling off a brand
Part of the restructuring of the corporation included selling off one of the company’s longtime brands, Nature’s Herbs. Nutraceutical International acquired the brand in December 2013. Tolworthy said the move was part of a refocus for the company. Reinvigorating the brand was not seen as the best use of Twinlab’s new resources.
“You look at a brand that has served the industry for years, and you look at where do you want to spend your resources best. There have been a lot of competitors that have come on board and have invested more in the area of herbal supplement than we have,” Tolworthy said. “Nature’s Herbs hadn’t launched new products and hadn’t updated many of their formulations. To become competitive was going to take more than the return was going to be. We are going to focus more on sports supplements and specialty supplements.
“I’m not much of a tea leaf reader, but somewhere along the line the whole leaf business started to become an extract business. I think that’s going to happen over time. Prop 65 and the lead levels mandated in that initiative are going to force everyone to move to extracts,” he said.
That is not to say that Twinlab is exiting the herbal business altogether or even the whole leaf end of it, for that matter. One of its legacy brands, Altvita Teas, remains a strong seller and Twinlab continues to update the brand to meet new market conditions.
“We have restructured Alvita, moving it from conventional to organic. We've done that for the 43 existing skus and will do it with 10 new skus. We’ve gone to great lengths to find raw materials that meet Prop 65,” Tolworthy said.
Seeking the best opportunities
As for the rest of Twinlab, Tolworthy said the company is committed to finding the best opportunities within its existing categories, and adding new capabilities that the company has been lacking up to now. The plan is also to tailor those efforts toward specific consumer segments, rather than trying to take a buckshot approach. That will mean inaugurating or acquiring new brands in specific channels. How those brands communicate with their customers must be specific, too, he said.
“What we have been saying about our business is that we are serious in our approach to being channel specific. The idea that a single brand works in all consumer channels is antiquated. When you are in the food, drug and mass channel, for example, you have three seconds to influence a consumer’s decision. You are really not well served in taking products that do well in the natural channel and taking that same brand into food, drug and mass. They are not really built to perform well there,” Tolworthy said.
Twinlab Consolidation Corporation was built to fund acquisitions, of which the remaining assets of the old Twinlab was only the first. As for others, Tolworthy had this to say:
“We are devoid in the gut health cateory. That is an area I’d like to add to our products over time. As for the rest, I am looking at trends, I am looking at new science, trying to pick that point where this industry is going to be in five years and trying to get there first,” he said.