Company Announcement - According to research company Mintel, U.S sales of over-the-counter energy products will increase to $13.5 billion in 2015. The global energy-boosting market is already 50 times bigger than it was 10 years ago. NeutriSci (TSX.V-NU) has developed NeuEnergy fast-acting chewable tablets, which have ‘zero calories, zero sugar and zero crash’. The tabs, which do not require water, contain a combination of caffeine and Pterostilbene – an ingredient found in blueberries. NeuEnergy has been found to enhance mental clarity and focus.
NeuEnergy is different from other energy products in that it is free of chemicals and has significantly less caffeine. The technology is simple and powerful. NU’s partner ChromaDex developed a molecule that bonds to caffeine, extending the half-life in the human body. “We are just starting to penetrate retail stores throughout the U.S.,” stated NeutriSci President Glen Rehman, “We are aiming to capitalise on the dramatic increase in the number of energy drink users. It is now a $25 billion a year global industry.” Various consumer behaviour studies have determined that consumers purchasing ‘5-hour-energy boosts’ at gas stations keep the bottles hidden – because of the stigma of being weak or unhealthy. NeutriSci has identified an opportunity to sell a healthy product that has no stigma.
“The energy market is starting to fracture,” explained Rehman, “There is coffee, which is primarily a social drink. Then there are little bottles which you buy at gas stations which help you survive your day. We see an opportunity in the gap between these two extremes with a delicious low-caffeine product that makes you feel better and perform better.” NeutriSci recently announced a distribution deal with ATA Retail Services - a leader in impulse merchandising supplying over 9,000 customer retail stores in 48 states and Canada including SuperValu, Kroger, and Safeway. But the explosive growth of the energy boosting market is not just a North American trend. Total consumption of non-alcoholic beverages in Africa in 2013 is estimated at $54 billion – about 6% of total global sales. Red Bull’s sales increased 31% last year in South Africa. With a population of about 1.2 billion and an expanding middle class – Africa is an important market for non-traditional beverage companies.
On April 15, 2015 NeutriSci entered into a 5-year exclusive distribution agreement valued at USD$7-million with B-Well Medical Supplies in South Africa. B-Well must do US$7 million in sales to maintain exclusive rights. In addition to margin on sales to B-Well, NeutriSci earns 8% royalty on all sales in South Africa B-Well specializes in distributing innovative health products in South Africa through specialty retailers, pharmacies, grocery stores and wholesale distributors. "The size of the market for NeuEnergy in South Africa is staggering,” stated B-Well CEO Nick Efstathiou, “NeuEnergy represents a disruptive change from the over-caffeinated energy products offered in the market today. We view this agreement as an incredible opportunity for B-Well." "We are excited to add our first of many international distribution deals,” stated Rehman in the press release, “B-Well has an excellent reach and a solid track record in South Africa."
South Africa is a relatively small country in terms of purchasing power, but for a company like NeutriSci with global ambitions, it is an important testing ground. Red Bull did about $120 million there in sales last year. “Our distribution deal in South Africa is a baseline for the type of deals we plan to do,” stated Rehman, “We are working on deals like this around the planet.” NeutriSci is currently trading at .39 with a market capitalisation of $14.6 million.