You know how they say you can only access 20 percent of your brain? What if you could drink a beverage that lets you access all of it?
The 2011 movie Limitless, starring Bradley Cooper, was based on this same idea, except Cooper's character takes a pill that lets him access the full 100 percent of his brain.
The results are inspiring to say the least. Who wouldn't want to learn Italian in a few hours or dominate the stock market to become a multi-millionaire overnight?
Welcome to 2019 and the world of biohacking and nootropics, a class of chemicals and natural occurring ingredients that switch on your brain and boost mental performance.
These "smart drugs or unique additives" can either be natural or synthetic, and they have become extremely popular in the past couple of years with white collar workers, computer programmers, gamers and top tier university students.
While not delivering a full 100% brain capacity as mentioned above, nootropics are supplements that purport to make us smarter. Believe it or not, these smart additives have been around since the early 1970s and contain such ingredients as choline, griffonia seed extract, theanine, acetyl l-carnitine, B group vitamins, iodine and magnesium.
You can find natural nootropics as well — artichoke extract, grape seed extract, ginseng, kava kava, lemon balm, Rhodiola rosea, St John’s wort, yerba mate, caffeine, green tea — substances the U.S. Food and Drug Administration has approved as dietary supplements and classifies as GRAS (generally regarded as safe).[1]
However the real challenge is finding the right combination of these ingredients.
Followers of the nootropic movement are adamant of the positive effects. They claim regular consumption could lead to consumers being more alert, getting a boost in memory, increased focus, more creativity, motivation, improved cognitive skills and a better overall outlook on life.
Sounds too good to be true, right? Maybe these early adopters have realized something we haven't ... they just might have found the secret to replace the entire energy drink market.
In the hyper-competitive environments of Silicon Valley and Wall Street, staying ahead of your colleagues is imperative to one's success. For years, online communities have been sharing their "recipes" of nootropic formulations to boost mental performance and endurance.[2]
There is no official data on their usage, but nootropics, as well as other smart drugs or additives, appear popular in Silicon Valley.
“I would say that most tech companies will have at least one person on something,” says Jesper Noehr a chief technology officer for a San Francisco startup.
It [nootropics] is a hotbed of interest because it is a mentally competitive environment, says Jesse Lawler, a LA-based software developer and nootropics enthusiast who produces the podcast Smart Drug Smarts. “They really see this as translating into dollars. But Silicon Valley types also do care about safely enhancing their most prized asset — their brains — which can give nootropics an added appeal," he says.[3]
Or take for example, Jay Jackson, President and CEO of Abacus Life.
Jay is a highly experienced alternative asset manager and capital raise expert with proficiency in directing fund portfolio and investor process. He has co-developed several funds, and has created significant value over market returns.
Jay started using nootropics daily and is not regretting one minute of it.
In a testimonial by Mr. Jackson, he describes his experience with a nootropic blend as “unlocking [his] full potential.” He credits nootropics for his increased energy, focus, and endurance in a high-stakes career. It’s like a real life Limitless pill.
Jackson believes that “[nootropics are] more than just a pill, but a lifestyle for success.”[4]
In a conversation on WallStreetOasis.com titled “Viagra for the Brain,” one commenter gushed, “This is not like caffeine or 5 Hour Energy. This is the big leagues.”[5]
Over the past couple of years, consumers have become more educated in their dietary choices and are looking for healthier beverage alternatives, i.e. avoiding high-fructose corn syrup, lowering their sugar content, as well as lessening intake of artificial ingredients and any artificial colors.
This ongoing trend demonstrates why the beverage industry is about to face an enormous transformational change. It has experienced several years of decline in sales of traditional sugary soft drinks, forcing major beverage companies to look at other categories of beverages to replace lagging sales.[6]
Big beverage companies are taking notice of the functional beverage movement, and are now watching the segment closely. There are a slew of new drinks that contain various combinations of nootropics to enhance brain function, and ingredients introduced that have no jittery side-effects like those of caffeine, which are contained in the energy drink brands they currently support and market.
Some nootropic beverage names you might have seen include Koios, Alpha BRAIN, Mental Mojo, TruBrain, Brain Toniq, Neu, CocoTropic, Think Drinks, and Neuro.
Due to the functional properties of nootropic drinks and their lack of the caffeine-crash, I believe they could become the next big thing in the functional beverage market and eventually displace energy drinks as the leader in future sales.
And the global nootropic market is booming. In 2015, the market was valued at $1.35 billion and is expected to reach over $6 billion by 2024, expanding at a CAGR of 17.9% from 2016 to 2024.[7]
Large retail chain stores such as Walmart (NYSE: WMT), Target (NYSE: TGT) and GNC (NYSE: GNC), to name a few, have a strong presence of nootropic mental performance beverages on their shelves. Online, powerhouse Amazon.com (NASDAQ: AMZN) also offers a wide selection of performance enhancing nootropic-infused drinks on their website.
These stores offer consumers a more extensive choice of products as well as a variety of new flavors, which all help increase consumer awareness and growth in the market.
Nootropic beverages are under the umbrella of the booming multi-billion dollar category of "Functional Beverages."
A functional beverage is a non-alcoholic drink which provides specific health benefits and contains non-traditional ingredients like minerals, vitamins, herbs, amino acids or added raw fruits.
Examples of functional beverages include sports and performance drinks, energy drinks, ready-to-drink (RTD) teas, smart drinks, enhanced fruit drinks, soy beverages, and enhanced water.
Functional drinks are typically more expensive than carbonated beverages due to their shift away from unhealthy and artificial ingredients. However, increasing health awareness in many countries is encouraging consumers to shift from beverages loaded with high-fructose corn syrup, artificial flavors and artificial colors to healthier alternatives in the functional drinks segment, which is expected to boost the demand for the product.
BevNet reported in 2016 that while carbonated soft drinks are in the middle of a five-year decline, natural and functional beverages should expect to see a 40 percent dollar growth in the industry.[9]
Major beverage companies are actively looking for entry into the functional beverage market, and are gobbling up smaller companies on a continual basis.
The key acquisition participants include The Coca-Cola Company (NYSE: KO), Monster Beverage Corporation (NASDAQ: MNST), PepsiCo (NASDAQ: PEP), Red Bull GmbH, Otsuka Holdings Co., Ltd. (OTC: OTSKY), Suntory Group (OTC: STBFY), Danone SA (OTC: DANOY), and Nestlé (OTC: NSRGY). These companies are engaged in strategic initiatives, embarking on new product developments with a sharp focus on acquisition in order to expand their consumer product offerings.[11]
Some recent acquisitions include Bai Brands, who was bought by Dr Pepper Snapple (NYSE: KDP); KeVita, acquired by PepsiCo (NASDAQ: PEP); and Made Group, who was bought up by The Coca-Cola Company (NYSE: KO).
Bai Brands founder Ben Weiss created a low-calorie, low-sugar, antioxidant-rich beverage based on coffeefruit — the bitter pulp that surrounds coffee beans that is usually discarded. After launching from his Princeton, New Jersey basement, Weiss spent years giving out samples, and landed on the Inc. 500 in 2015. In 2017, Dr Pepper Snapple Group bought Bai for $1.7 billion.[12]
Dr Pepper Snapple had previously invested in Bai as one of its “allied brands,” or young brands it distributes on its network. It acquired Bai this year in a bid to diversify away from the carbonated drinks that dominate its portfolio and are increasingly out of favor with consumer groups. [13]
PepsiCo is the latest company rushing into the market for healthier alternative beverages. On the same day that Dr. Pepper Snapple announced a $1.7 billion deal to acquire Bai Brands, PepsiCo made a smaller move with the purchase of KeVita, a producer of fermented probiotic beverages.
With this purchase, PepsiCo aimed to boost the offerings of health and wellness soft drinks. The organic, non-GMO and gluten-free offerings of KeVita have resonated well with consumers, as the company has seen rapid growth since being founded in 2009.
Australian beverages manufacturer and distributor Coca-Cola Amatil and US-based Coca-Cola Company jointly acquired a 45 percent minority interest in Australia-based Made Group. The acquisition is part of The Coca-Cola Company’s ongoing move toward realizing a portfolio that includes a variety of healthy options. Financial terms were not disclosed.
The Made Group’s (private company) portfolio includes cold-pressed juices, high-protein smoothies, probiotic milk, yogurt, coconut water and cold-brew coffee. Made Group is known for leading Australian beverage brands including Cocobella, Rokeby Farms, Schnobs, Impressed and the company’s first brand, NutrientWater, which was launched in 2005.
The Coca-Cola Company has announced a number of deals and acquisitions underlining its ambition to become a total beverage company. In 2018, the company acquired Organic & Raw Trading Co., the Australian maker of the kombucha brand, Mojo.[15]
It also reached a definitive agreement to acquire UK-headquartered coffee chain Costa Limited for £3.9 billion (approximately US$5.1 billion) in January of 2019. In August of 2018, Coca-Cola acquired a minority ownership stake in BODYARMOR — a fast-growing line of premium sports performance and hydration beverages. It is also eyeing CBD for its potential in the functional beverages market.[16]
The number of deals in the past couple of years shows not only the appetite for acquiring newly emerging beverage companies, but specifically companies that have a unique offering in the functional beverage space that diversifies their beverage portfolios.
Koios Beverage Corp. (OTC: KBEVF / CSE: KBEV / FRA: 7521.F)
Koios developed a proprietary nootropic formula that has been shown to enhance brain function including mental focus, memory, and concentration.
Its formula includes superfoods such as lion's mane mushroom, which contains bioactive substances with beneficial effects on the body, brain, heart, and gut. The Company produces the formula as a line of healthy, organic beverages and drink powders.
Koios has a distribution network of retail locations across the United States including Walmart, GNC and Max Muscle. Together these distributors represent more than 2,000 locations, from sports nutrition stores to natural grocery chains.[17]
In February of 2019, the Company announced breaking news that it had signed a vendor agreement with Walmart, the world's largest retailer.[18]
"Working with the world's largest retailer is an honor," said Koios CEO Chris Miller. "Walmart has begun carving out significant shelf space in select locations to build the next generation of better-for-you brands, and we are truly excited to be one of them. Making the world a healthier place is our mission and our relationship with Walmart will be a tremendous catalyst for reaching a mass audience for our brand."
Miller continues, "The vendor agreement is a pivotal development for a Denver-based startup that has become a standout in the functional beverage industry."
Initially, Koios products will be available in 1,094 Walmart locations across the United States.
Koios also has a line of CBD beverages that are currently under development.
I am currently working on delivering a full report on Koios Beverage in the coming weeks, as I find the upside potential most appealing.
New Age Beverages Corporation (NASDAQ: NBEV)
Founded in 2010, New Age Beverages Corporation develops and markets a portfolio of beverage brands that are sold using the company’s distribution network or through supermarkets, pharmacies, and other outlets.
The Company has been very active in acquiring smaller brands and adding them to their portfolio. Acquisitions include Xing Tea, Aspen Pure, Marley Beverage Company, Coco Libre and Premier Micronutrient Corporation.[19]
New Age Beverages turned heads in September 2018 after announcing that it would be rolling out CBD-infused drinks under the acquired Marley Beverage brand. The stock price soared in the months after and later gave up some of those gains.[20]
As the stock traded into higher levels, the company was able to raise enough money for a mostly cash acquisition of Morinda Holdings. That move was a game changer for the company with huge increases in revenue and gross profits. It also opened up relationships with retail outlets in over 60 countries, expanding the reach of its existing portfolio.[21]
New Age Beverages is one of a few companies in the beverage industry building out its intellectual property. The portfolio of brands and IP in New Age's Health Sciences Division bridges the divide between pharmaceuticals and nutraceuticals — delivered in a tasty ready-to-drink form.[22]
The Company is well positioned to make further gains in the multi-billion dollar functional beverage market.
Consumer trends are rapidly shifting away from sugary beverages and energy drinks — once the core business of the major beverage brands. Instead, data shows consumers are interested in healthy options that bring benefits such as bone and heart health enhancement, mental energy improvement, immune system strengthening, and cholesterol management.
The large beverage companies are actively searching for and acquiring smaller emerging beverage companies looking to bolster sales with products that appeal to changing consumer demands.
I believe this is a great time to start your research regarding the consumer benefits represented by the upcoming functional beverage sector. There are very few public companies operating in the nootropics segment investors can invest in.
I am continuing my research in the space, and will look to identify new companies that are ripe for acquisition, and report my findings here on FNN.
Stay tuned.
MF Williams, Contributor
for Investors News Service
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[1] https://www.forbes.com/sites/mikemontgomery/2016/01/19/better-strongerfaster-why-nootropics-will-be-big-business-in-2016/#1803c0cf62fc, https://www.mydrinkbeverages.com/nootropic-beverages-is-a-future-of-functional-drinks
[2] https://www.reddit.com/r/Nootropics/, https://www.facebook.com/wallstreetnootropics/
[3] https://www.theguardian.com/technology/2015/jul/11/hack-yourself-nootropic-drugs-upgrade-mind
[4] https://smallbiztrends.com/2015/01/optimind-nootropic-secrets-behind-wall-street.html
[5] http://nymag.com/news/intelligencer/modafinil-2013-4/
[6] https://www.marketwatch.com/press-release/demand-for-functional-beverages-grows-as-consumer-shift-towards-healthy-choices-2018-12-13, https://www.grandviewresearch.com/industry-analysis/functional-drinks-market
[7] https://www.mentaltitan.com/wp-content/uploads/2018/07/2019_KBEV_Investor_Deck-Updated-482019.pdf
[8] https://www.mentaltitan.com/wp-content/uploads/2018/07/2019_KBEV_Investor_Deck-Updated-482019.pdf
[9] https://www.sfet.de/de/functional-beverages/
[10] https://www.grandviewresearch.com/industry-analysis/functional-drinks-market
[11] https://www.grandviewresearch.com/industry-analysis/functional-drinks-market
[12] https://www.inc.com/magazine/201707/will-yakowicz/ben-weiss/how-i-did-it-ben-weiss-bai-brands.html
[13] https://www.cnbc.com/2017/10/25/dr-pepper-snapple-learns-what-it-takes-and-how-much-it-costs-to-grow-bai.html
[14] https://seekingalpha.com/article/4025867-pepsico-going-probiotic-following-acquisition-kevita
[15] https://www.beveragedaily.com/Article/2018/10/04/Coca-Cola-takes-45-minority-interest-in-Australian-beverage-company-Made-Group
[16] https://www.nutritioninsight.com/news/coca-colas-health-push-continues-with-acquisition-of-australias-made-group.html
[17] https://www.newswire.ca/news-releases/koios-subsidiary-cannavated-to-develop-line-of-cannabis-functional-beverages-682267841.html
[18] https://finance.yahoo.com/news/koios-beverage-corp-secures-purchase-120000680.html
[19] https://seekingalpha.com/article/4231847-new-age-beverages-morinda-acquisition-lead-higher-revenues
[20] https://www.fool.com/investing/2018/09/24/big-highs-wont-last-for-new-age-beverage-stock.aspx
[21] https://www.fool.com/investing/2019/06/11/is-it-time-to-believe-in-new-age-beverages-stock-a.aspx
[22] https://newagebev.com/en-us/nhanced-recovery
