Twinlab's manufacturing plant humming with acquisition of contract manufacturing business

By Hank Schultz

- Last updated on GMT

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Twinlab's manufacturing plant humming with acquisition of contract manufacturing business
Twinlab Consolidated Holdings has acquired the book of business of contract manufacturer Nutricap Labs in a deal that will solidify the plan to maintain the company’s in-house manufacturing capacity, Twinlab CEO Tom Tolworthy said.

Twinlab manufactures its own products at a plant in American Fork, Utah.  The fate of that plant was one of the things up in the air as Tolworthy negotiated a management buyout last year with  private equity investors and the holders of the company's debt.  

“Part of our business plan in acquiring Twinlab in the first place was to take advantage of the manufacturing plant,”​ Tolworthy told NutraIngredients-USA. “There certainly was an option to close the plant and move to co-packers.”

Checkered history

Twinlab is one of the best-known names in the dietary supplement business.  Unfortunately, it hasn’t always been well-known for the right things. The company has had a history of something of a boom and bust cycle. The company launched with a wildly popular protein powder that was tied in with a fad diet.  When the diet fell out of favor sales of that product tanked, the brand reinvented itself as a broad-based dietary supplement company.  But sales tanked again, and the company filed for Chapter 11 bankruptcy in 2002.  Twinlab also acquired a wide array of brands over the years, including Metabolife, Nature’s Herbs and Alvita teas.  Before Tolworthy came on board in 2011, the company had become known for a bewildering array of brands. Paring those offerings down to core brands built for specific channels was part of Tolworthy’s initial turnaround efforts.

Tolworthy said when he started the turnaround process the fate of the manufacturing plant and its 220 employees loomed large in his calculations. Structuring the buyout to include an employee ownership element​ was part of the plan. But the manufacturing plant  was built to service a need that the company, in its streamlined circumstances, couldn’t supply at that time.  Using that capacity to manufacture products for other companies was an obvious answer, but how best to get there?

Front end for contract manufacturing

“I would much like to keep those 220 people employed.  I wanted to find a way to pay for that building and those jobs from a contract manufacturing standpoint.  What Nutricap gives us is a front end of that business.  We acquired a book of their business and access to their customer base,”​ Tolworthy said.

Nutricap brings a history of strong customer service that will carry forward as a part of Twinlab, Tolworthy said. It’s case of buying a wheel rather than inventing a new one.

“What they had was a marketing front end that has learned how to both quote prices and maneuver within the industry on an outgoing call basis.  They have a significant customer base with the products they have done over the last several years,”​ he said.

Nutricap was founded in 2005. In 2013, then CEO of the company, Jonathan Greenhut, told NutraIngredients-USA that sales had grown into the $30 million range​.

“With Nutricap, we gain 20% to 28% automatically.  We can provide that new base of customers a manufacturing quality that Nutricap on its own might not have been able to achieve,”​ Tolworthy said.

Crossing a milestone

Tolworthy said that with the work that had been done to expand and especially with the new acquisition Twinlab has moved from barely treading water with it manufacturing capacity to adding shifts and jobs.

“We have crossed a milestone in Twinlab’s recovery by virtue of this deal,”​ Tolworthy said. “A while back we were operating on one shift and that one shift was only at 80% capacity and they were spending the rest of the time cleaning machinery to fill out the day.  We moved from barely occupying one shift to two full shifts and we have increased the number of jobs by about 24 new full time employees. We are now operating at an efficiency level that really makes the manufacturing plant pay.”

The Nutricap deal had a significant gestation period.  Back in 2013, when the management buyout terms were first announced, Twinlab Consolidation Corp. had options to acquire two additional companies beyond the assets of the old Twinlab itself.  Nutricap was one of the those companies.  Aiding the acquisitions was Tolworthy’s adroit maneuvering to sequester the debt​ the old Twinlab was still saddled with. The final deal should be announced sometime soon, Tolworthy said.

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