Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

Startup CPG Scoop:
Kyle Busch’s Rowdy Energy is shutting off its engines

Co-founder Jeff Church joined Daniel Scharff on the Startup CPG podcast to share the story, his learnings from his time at Rowdy, and how he is now helping entrepreneurs through TeamChurch.co. Read on to hear highlights from their conversation and/or listen to the full episode wherever you get your podcasts. 

Starting Rowdy Energy

“Right at the time I was about to transition out of [the CEO position at] Suja, I got a call from a NASCAR driver named Kyle Busch. He’s one of the top NASCAR drivers and he had been an energy drink ambassador for Monster for a number of years. He really liked the space and wanted to get into it. He had found me as a beverage entrepreneur and he approached me about potentially partnering and doing an energy drink together. I looked at the space with him and I said I was definitely interested — as long as we could find consumer white space and retailer incrementality. Because if you don’t, then [retailers] aren’t going to put you on the shelf in a crowded space. And if they do put you on the shelf, you’re not going to get off the shelf because consumers aren’t going to pull the product because it’s not white space to them.”

“So we did a deep dive into it and looked at a lot of data, and I figured out that men and women both consume about the same amount of caffeine on a daily basis. But energy drinks are probably 65% male and 35% female. And when you look at it, it’s because women generally feel like energy drinks are full of crap and they are 99% of the time. So we decided to create an all-natural better-for-you energy drink called Rowdy. In hindsight, maybe one of the mistakes was calling our brand Rowdy. Rowdy is Kyle’s nickname in the NASCAR world…but probably for a better-for-you energy drink that may not have been the best name.”

Hindsight is 2020

“I think because of my background in CPG and Kyle’s background in driving and as a celebrity, we were able to get really broad distribution, and we grew into probably 25,000 doors within 18 months. But the product wasn’t turning fast enough…I had a rule at Suja that you don’t have to be first in a market, you just don’t want to be 51st. [Suja was] third in the cold-pressed juice market. In the energy drink market, I kind of violated my lesson, and we were probably 101st. It’s a very crowded space. So if you get in there, you’re in a big set. It’s kind of an illusion because it’s growing fast…It’s an $18 billion segment growing at…8% a year…So it’s very attractive to look at, but it’s very hard to break in. And when you do break in, you have large slotting fees because retailers will let you in, but they’re going to charge you. There are some retailers that will charge a 4k slotting fee per flavor per door to go into…so unless you’re going to be in there for several years, you’re not going to be able to pay that back. So we had high slotting…and unfortunately, we didn’t get the velocity that we needed. I think a little bit because we went too fast with distribution…the traditional launch of a product would be a natural foods limited geographic launch, and then expanding that and then adding strategic grocery accounts, and then building that out over time. It was energy drinks, so I felt like we could go broader, quicker, and I felt Kyle’s background would help us.” 

“I also think that what happened is that marketing has changed. It’s been changing for the last five or six years..it’s gone much more to influencer, ambassador, celebrity, kind of trusted confidant by the consumer who they can rely on. [Marketing] shifted and I don’t think we did a good job in shifting our focus. And although Kyle is premier within the NASCAR channel, he’s not really well known outside of the NASCAR channel. What we also realized in the NASCAR channel is that people really like their driver, but there are 40 drivers, so if he’s not their driver, then they tend not to like that driver. So there’s a bunch of mistakes that we made along the way.”

Shutting down Rowdy

“Unfortunately, with Rowdy, we have had to make the decision to close it down, and that’s been a very painful decision, one that we didn’t take lightly. I put an incremental million and a half dollars into the brand over the course of 2023 to try to make it work. We felt like we had another celebrity to bring in, another equity firm, but the deal kind of fell apart. It’s very disappointing. [There are] wonderful people in the organization, people that gave their all, and unfortunately, it didn’t work.”

“I talk a lot with founders about ‘Don’t throw in the towel’ because you never know. Success might be right around the corner. But in our case, the market told us that they weren’t willing to invest more into it. I was tapped out personally, and Kyle had put a lot of money into it himself. He was tapped out, and we weren’t able to effectively fundraise for it…And while we saw nice improvements with the second product line that we launched, we never got the branding right. That was going to happen in 2024 and that was killer branding, but we ran out of time.” 

“I talk a lot with people about the rule of twos…everything takes twice as long as you think at the beginning and costs twice as much money. And that’s a little bit of an exaggeration, but as an entrepreneur, you don’t want to go into something if it’s as tight as tight can be and you have to hit on every single metric to be successful. Because shit happens.”

What’s next for Jeff 

“At all of the eight companies that I’ve had over the years, I’ve been the CEO…and I’d like to transition where I can work with other people that are in that position now. I find a lot of joy in working with people…so I’m really interested in creating Teamchurch.co…Team church is about working with entrepreneurs at any stage that they’re at…I really want to create a website with a range of offerings that range from one-on-one monthly consulting to specific project stuff…If I can help people get better advice, at least advice for me that worked, I think that would be a positive thing to do and I really enjoy doing it.” 

“We’re building out the Teamchurch.co website and I would love for people to reach out to me on LinkedIn and start a conversation. If you’re an entrepreneur, if you’re anxious, you can’t sleep, you’re probably doing things about right…Keep true to your lighthouse, keep course correcting, and work with organizations like Startup CPG. Check me out on LinkedIn. Just ask for advice. You don’t get what you don’t ask. And if you ask, you’ll get more than you think. So I just encourage you to not be disillusioned in the process. You can change your stars…You can do all of that if you work hard at it, if you get a little bit of luck, if you surround yourself with the right people, and you have a great product.” 

Contact Jeff on Linkedin here!

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