Andy Coyne speaks to Alan Barratt, CEO of UK sports nutrition business Grenade, about how branding and distribution have aided the company’s move into the mainstream.
The rise of sports nutrition products on the shelves of supermarkets in recent times has been nothing short of remarkable, driven by growing interest in food and drinks to support more active lifestyles.
But while the core market for products sold to avid gym users, cyclists and runners is not to be sniffed at – and still growing – the sports nutrition sector has also been fuelled by a larger number of less avid consumers trying to become a little more active and companies in the category have responded accordingly, taken their products into more mainstream parts of the grocery aisle.
The traditional sports nutrition category, of powders, drinks, pills and bars aimed at the most active, is still there but the businesses growing fastest are those that have understood the larger market is in more healthy lifestyle products for the masses.
Step forward Grenade.
The business, based near Birmingham in the English Midlands, is only nine years old but its products – bars and shakes being at the forefront – are present in almost all major UK supermarkets, convenience stores, garages and, most recently, coffee shops.
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In April, Ireland-based advisory firm Alantra’s research revealed Grenade is the second fastest-growing privately-owned food and beverage company in the UK.
And Grenade quotes research from IRI that reveals that, as of June 2019, its Carb Killa protein bar outsells all chocolate bar brands except two in UK supermarkets – a sign of both the more mainstream interest in its products and the company’s success in capitalising on that demand.
Grenade’s origins are very much based at the bodybuilding end of the market. Co-founder and CEO Alan Barratt, who set up the business with his wife Juliet, the company’s chief marketing officer, admits to being someone who has spent his whole life around gyms.
“I’m an unqualified gym instructor. I’ve been in and out of gyms since I was 14, it’s a specific interest of mine,” he says. “My first job in a gym was when I was about 18. I worked with a lot of bodybuilders so I learned things word of mouth and I also wrote for a couple of health and fitness magazines.”
What Barratt picked up from working in gyms was the demand for supplements. “I watched the supplement industry start to grow. I was interested in supplements because I was a poor eater and I was skinny,” he says. “The Biocare supplement business moved in next to my gym so I started talking to a guy who was developing supplements.
This is where Barratt had what might be seen as the first of several flashes of inspiration. “I thought this could have mass market appeal and not just for bodybuilders,” he says.
Barratt started a supplement round, supplying gyms with products from Biocare and other providers from the back of his car to gyms on a sale or return basis, leading to him establishing the Fusion supplements distribution business in 1999.
It is worth remembering back then exercise as a mass leisure pursuit was in its infancy. “In those days gyms didn’t have running machines and bikes. It was very spit and sawdust,” Barratt recalls.
But, even so, a business selling supplements to bodybuilders and other gym users was a decent living and could have remained Barratt’s future but, having worked out such products could have a wider appeal, Barratt realised he needed to set up an immediately recognisable brand.
Grenade was trademarked in 2006 and in 2008 Fusion was sold so Barratt could concentrate on the new entity.
“The Grenade name was a good one. I’ve always had an interest in the military,” Barratt says.
The business got up an running in 2010, initially with the idea of having one product like energy drink brand Red Bull, which Barratt often uses as his reference point.
“I wanted us to be the Red Bull of sports nutrition,” he says. “I still want our products to be sold everywhere in the UK where you can buy a Red Bull.”
The business was born in a recession and Barratt admits there was just GBP27 (US$33) in the bank account at the time but it was also born at a time when hard exercise was becoming much more mainstream and gym-users and others were increasingly looking for products to boost their performance.
“We’ve definitely had some help with timing. We launched our brand as men’s health was moving away from bodybuilders,” he says. “A mate of mine invented lactose-free milk but in the wrong decade.”
Barratt’s experience in distribution came into its own now. “I knew what sold and what didn’t,” he says.”We started in specialist retail. We were in GNC and Holland & Barrett in the first year. We launched into Tesco in 2012. They were quite far ahead of the curve.”
By this stage Barratt himself was ahead of the curve in understanding that most sport nutrition products, which usually had names that sounded like something you would pick up in a pharmacy and, he remarks, often consisted of “white medical looking tubs of protein”, were unlikely to have mass appeal. When in supermarkets, the products would usually be next to the medical supplies. It was a tough concept for retailers to understand.
“We had bars sitting next to the pile cream in the early days. Merchandising’s still a problem now in retail”
“We had bars sitting next to the pile cream in the early days,” Barratt says. “It’s still a problem now in retail. We outperform confectionery for the most part and yet we can be stuck at the back of the store. The category is so confusing. We pull from sports nutrition, healthy eating and confectionery.”
As Grenade developed it became clear its proposition was very different from its sports nutrition peers. It was based around creating a brand with mass appeal backed by clever marketing and packaging initiatives. A tank was used to introduce the brand at a trade show and some products came enclosed in a grenade (not real of course).
Barratt had changed his mind about having one product and launched plenty, across bars, shakes, supplements and more.
But he never forgot his bodybuilder-gym roots. Those products are still there with the company’s website distinguishing between active nutrition (healthy snacks etc) and sports nutrition for training use. And on that website you can now buy Grenade toy tanks and a branded clothing range.
By any standards, the company’s rise over nine years has been phenomenal. It has outperformed a category which has itself boomed.
Euromonitor figures quoted by Grenade show that, as of June 2019, the UK sports nutrition market was worth GBP897m, up 19% year-on-year. The global market is worth GBP12.4bn (up 8% year-on-year).
Such growth has not passed the investment community by and Grenade is now in its second spell of having private-equity backing.
In March 2017 private-equity firm Lion Capital acquired a majority stake in the company from the Barratts and original backer Grovepoint Capital in a transaction that valued the business at GBP72m.
Barratt is sanguine about Lion’s involvement. “Private equity has added some structure we needed. It has professionalised the business in some ways,” he says.
“Lion started with 12 board meetings a year and that has been reduced to four. They back the management team. But Lion are not long-term brand owners. They want to build brand value. We’ve had very easy conversations with them. They’ve never told us not to do something.”
Which is surely smart because Barratt and his team – 60 people in total, seven of whom are in US – are still full of ideas of how to grow the business.
At the start of this year, Grenade took its high-protein, low sugar brand Carb Killa range into biscuits. And it has now forged a deal with high-street chain Costa Coffee, which will see two of its Carb Killa bars sold in its outlets.
To Barratt it’s all about building the brand and increasing sales points.
To meet demand – 140,000 bars are being sold every day – after a ten-month tender process, Grenade has tied up a new distribution deal with third-party logistics firm DCS, which also distributes products for Unilever.
And Barratt has no plans to slow down “I met Red Bull last year. They’ve been trading for 38 years and we’ve been going for nine. They said they’ve still got 200,000 distribution points to target,” he says.
“We can double the size of our business by putting our bars everywhere,” he says. “Shakes can grow and there’s biscuits, vegetarian, vegan, the clothing range.
“It all comes back to the supreme brand power. No-one makes a bad tasting protein bar now. But we’ve got a recognisable, memorable name. Would I want to wear a T-shirt with Mars on it? Not really. But Red Bull? Yes, because of the power of the brand and the link to motor racing.”
Grenade’s international reach is also notable. Some 25% of its sales are now overseas and it sells into 80 markets.
And although it hasn’t forgotten its bodybuilding gym roots, that’s not where it is at today.
“We don’t do speciality nutrition shows now. If you think small you will stay small,” Barratt says. “If you want to compete with Coca-Cola you need to stand near Coca-Cola. It’s all about giving the mass market consumer a healthier option.”
And despite that private-equity cash, Barratt says he has no intentions of walking away.
“I really enjoy it. And the business performance speaks for itself. I genuinely feel we are just getting started,” he says.
And the broader category? Barratt is fond of pointing out that for the health and fitness ‘trend’ to disappear it needs people to start saying “I want to be unhealthy and to die younger”.