(RAISE COMPLETED) Sports nutrition (drink) opportunity


Opportunity Type: Minority equity opportunity
Industry Type: Sports / Nutrition
Profitibility: Pre Revenue
Company Location: Australia
Deal Value: Circa $2m
Founded: January 01, 1970
Registered Here: January 01, 1970

Problem

Dehydration during exercise negatively affects athletic performance. Fluid loss of >2% bodyweight during exercise can reduce athletic performance by up to 30% including endurance, sprint times, power, reaction times, decision making and skill execution. Ave sweat rate is 1-3L/hr, so intense exercise >1hr will likely result in fluid loss near or >2% bodyweight making this common in most popular sports.

Competing sports drinks have 2 key shortcomings; 1) they have too much sugar, which slows fluid absorption, and 2) they only use the small intestine for hydration, ignoring the significant hydration potential of the large intestine.

Solution

This company has developed a novel, two-part hydration system using our proprietary resistant starch (RS) formulations, which are scientifically proven to increase fluid uptake in the large intestine – accessing a largely untapped potential of up to 5-6L/day (up to 30% increase). By increasing the body’s hydration potential and reducing dehydration during exercise, PREP’D allows athletes to perform at their peak for longer and recover faster.

Based on >20 years of University & clinical research, the hydration system includes two drinks, consumed Pre- and Post-exercise, which both use RS to significantly enhance the hydration effectiveness of all other fluids consumed.

Market

The global sports drink market is worth $17b globally and is growing at 8.1% over the next 5 years. AU is worth ~3% and the US ~40% of this market. The initial target market for launch is endurance sports enthusiasts: there are >3.5m people in AU who exercise >3 times per week for over 1 hour.

Other addressable markets include health drinks (prebiotic) defence, mining, & emergency services.

Competitive Landscape

While Gatorade and Powerade dominate the mass market for sports drinks, this company will initially compete more directly with endurance-focused competitors including Endura, PureSport, SIS, Hydralyte Sports, Accelerade, and Cerasport. Differentiation is based primarily on subtle formulation variations of electrolytes and carbohydrates.

No competing sports electrolyte drink incorporates the proprietary RS-based formulations and unique hydration benefits of this sports drink.

Business Model

Grassroots launch strategy initially targeting endurance sports enthusiasts (e.g. triathletes, endurance cyclists) to avoid direct competition with market leaders Gatorade and Powerade.

Sell online, in sports specialty stores & gyms, then chemists & nutrition stores, before achieving ranging in supermarkets and then launching in the US and EU to pursue rapid growth.

Support the launch with relevant ambassadors & sponsorship, referral partnerships with sports dietitians, launch event, product sampling, PR, content marketing and targeted digital advertising. - Retailer and consumer feedback indicates a price premium of 40-60% is achievable and low manufacturing costs leave 45-55% gross wholesale margins.

Dehydration during exercise negatively affects athletic performance.

Fluid loss of >2% bodyweight during exercise can reduce athletic performance by up to 30% including endurance, sprint times, power, reaction times, decision making and skill execution. Ave sweat rate is 1-3L/hr, so intense exercise >1hr will likely result in fluid loss near or >2% bodyweight making this common in most popular sports.

Competing sports drinks have 2 key shortcomings; 1) they have too much sugar, which slows fluid absorption, and 2) they only use the small intestine for hydration, ignoring the significant hydration potential of the large intestine.

Solution

This drink is a novel, two-part hydration system using our proprietary resistant starch (RS) formulations, which are scientifically proven to increase fluid uptake in the large intestine – accessing a largely untapped potential of up to 5-6L/day (up to 30% increase). By increasing the body’s hydration potential and reducing dehydration during exercise, PREP’D allows athletes to perform at their peak for longer and recover faster.

Based on >20 years of University & clinical research, the hydration system includes two drinks, consumed Pre- and Post-exercise, which both use RS to significantly enhance the hydration effectiveness of all other fluids consumed.

Market

The global sports drink market is worth $17b globally and is growing at 8.1% over the next 5 years. AU is worth ~3% and the US ~40% of this market. The initial target market for launch is endurance sports enthusiasts: there are >3.5m people in AU who exercise >3 times per week for over 1 hour.

Other addressable markets include health drinks (prebiotic) defence, mining, & emergency services.

Competitive Landscape

While Gatorade and Powerade dominate the mass market for sports drinks, this company will initially compete more directly with endurance-focused competitors including Endura, PureSport, SIS, Hydralyte Sports, Accelerade, and Cerasport. Differentiation is based primarily on subtle formulation variations of electrolytes and carbohydrates.

No competing sports electrolyte drink incorporates the proprietary RS-based formulations and unique hydration benefits of this drink.

Business Model

Grassroots launch strategy initially targeting endurance sports enthusiasts (e.g. triathletes, endurance cyclists) to avoid direct competition with market leaders Gatorade and Powerade.

Sell online, in sports specialty stores & gyms, then chemists & nutrition stores, before achieving ranging in supermarkets and then launching in the US and EU to pursue rapid growth.

Support the launch with relevant ambassadors & sponsorship, referral partnerships with sports dietitians, launch event, product sampling, PR, content marketing and targeted digital advertising. - Retailer and consumer feedback indicates a price premium of 40-60% is achievable and low manufacturing costs leave 45-55% gross wholesale margins.

Development to date:

 >$15m background University and clinical research.

3.5 years of in-kind commercial development from Flinders Partners.

>2 years of in-kind product development from Steric Trading.

$142K TechInSA grant from May 2017. 

>$50K media exposure in July 2017.


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