Beer Marketer's Insights - Tho Soylent Took Some Hints in Q3, Starco Brands Says Stage Is Set for Comprehensive Retail Expansion of Multiple Brands in 2025; No Further Word on Soylent Rebrand

Starco Brands, an agglomeration of consumer entries whose biggest holding by far is acquired Soylent meal replacement brand, saw its sales weaken in Q3 but claimed to have set stage for broad retail buildout in 2025 of brands playing in multiple food/bev and personal care segments. Key highlights for period, per CEO and interim CFO Ross Sklar, were attaining positive adjusted EBITDA and sequential margin improvement as shared-services premise that underlies strategy enabled co to remove $3 mil in annual costs. So it's new phase of journey after "a lot of heavy lifting" and there's now a "clear roadmap for each of our brands." One byway that Starco might not be treading after all: nothing was said on idea Sklar had floated on prior call of rebranding Soylent as Complete in its non-ecomm channels, presumably to get away from negative associations of soybeans with some shoppers these days and to ride momentum of its Complete Protein line (BBI, Aug 14). So maybe that won't be happenin' after all. Our own efforts to get clarification in recent months had not drawn any responses. Biggest of its brands by far is Soylent, which seems to have softened a bit in Q3. Starco's net sales eroded 7.9% to $14 mil, in part because of lower ecomm sales of Soylent as co sought greater efficiencies in its marketing spend, as many peers are also doing. Brand also took a hit when Walmart undertook revamp of its RTD meal replacements. Also exerting a drag were lower Whipshots sales due to inventory stocking adjustments, offset in part by continued growth for Winona Popcorn Spray and Art of Sport personal care/nutrition brand. Gross margin weakened to 45.6% vs 50.9%. Operating loss was $5.6 mil, reversing year-earlier operating profit of 2.7 mil. For 9 mos, revenues are off 9.7% to $41.8 mil. Operating loss widened to $20.6 mil from $4.8 mil a year earlier.Starco Brands, recall, is platform for such consumer brands as Winona Popcorn Spray, Art of Sport and Whipshots. Pickup of struggling Soylent brand in Feb 2023 immediately tripled co's size. Starco Brands draws much of its production via license from affiliated co called The Starco Group (TSG), a bev and aerosol player that's heavily reliant on private-label biz and plays in segments from hardware, paint and cosmetics to edibles like food, cooking oil, bevs and spirits. Sklar is founder/CEO of TSG. Starco Brands is an effort to tilt more into promising branded spaces. Only specific segment breakout we could find in Starco Brands' 10-Q filing was for YTD, showing that Soylent revenues grew 10.2% to $30.4 mil, which amounted to 73% of total Starco sales. Soylent's gross margin widened to 30% from 26.3% the prior year.Among its other bev plays, Art of Sport recently entered segment with protein powder line as part of broader push to "own the locker room through innovation," per Sklar. After launching on Amazon, its personal care, nutrition and pain management items all are heading into retail, including protein powder picked up by Kroger's Fred Meyer banner. The items all are heading onto Costco.com starting Dec 18, the date when brand activates sponsorship of LA Bowl Hosted by Gronk college football showcase at SoFi Stadium via 4 national TV ads and in-arena billboards.Whipshots might rate as a bev-adjacent brand. That's now in 47 states and DC, ensconced in over 1,200 Kroger stores along with Costco in Louisiana and on cocktail menu at Dave & Buster's 152 locations. It's been working a collab with Pernod's Kahlua brand at retailers like Walmart and Kroger.

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Tho Soylent Took Some Hints in Q3, Starco Brands Says Stage Is Set for Comprehensive Retail Expansion of Multiple Brands in 2025; No Further Word on Soylent Rebrand

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