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How This $30 Million Gatorade Competitor Became an Overnight Success–After 14 Years

Nuun & Company has some bona fide momentum. It’s been more than a decade in the making.

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BY Cameron Albert-Deitch - 16 Oct 2018

gatorade competitor became overnight success

CREDIT: Courtesy Nuun & Company

 

In March 2015, Travis McKenzie was hit by a car.

The Vancouver-based triathlete and nine-time Ironman finisher suffered a broken neck and dislocated hip. Bedridden for a month, he needed to replenish his electrolytes without consuming too many calories. Someone handed him a tube of Nuun (pronounced "noon") tablets, which dissolve in water to create an electrolyte-rich sports drink. McKenzie liked the taste, and was surprised by their low sugar content. "I was consuming Nuun by the tubeload," he says.

He sent the Seattle company a thank-you note. A marketing rep responded, and continued to check in with him as he returned to training. That was a very good move. As it happened, McKenzie was Lululemon's global events manager, and in 2016, Nuun became the sports drink partner for the apparel company's annual SeaWheeze Half Marathon and Sunset Festival.

The company has today parlayed that event--plus hundreds of other so-called mass-participation events--and a presence in more than 10,000 North American stores into a genuine money-maker. This year, and for the eighth time in nine years, Nuun landed on the Inc. 5000, a list of fastest-growing private companies in America. Its 2017 revenue clocked in at $21.6 million, having grown 91.3 percent percent from 2014. Nuun's revenue this year, projected to top $30 million, will give the company its third straight year of profitability.

And while McKenzie's brush with fate--and subsequent desire for a low-sugar pick-me-up--was entirely unexpected, the company's success has been a long time in the making.

"I'll use a phrase from our head of marketing," says CEO Kevin Rutherford. "Nuun: It's that 14-year overnight success."

Nuun & Company CEO Kevin Rutherford. >CREDIT: Courtesy Nuun & Company

A business of relationships

Nuun's basic selling point has always been the same: You don't need that much sugar in your sports drinks to rehydrate. That's a shot at PepsiCo's Gatorade and Coca-Cola's Powerade, which continue to lead the sports drink industry in just about every category by a significant margin, according to Gary Hemphill, managing director of research at Beverage Marketing Corporation.

Five years ago, when Rutherford was brought into the company, Nuun needed a culture shift. It was a fast-growing startup that had been selling to specialty stores and regional chains for nearly a decade, and didn't know how to turn short-term success into long-term vision. The founder, Tim Moxey--a triathlete who developed the first Nuun tablets to help himself train--built the business off relationships with local store owners. That's something Rutherford attempts to emulate as he works to scale the business. (Moxey left in 2010, founded a Seattle-based cannabis startup in 2013, and sold his Nuun ownership to a group led by Dan Nordstrom in 2015. Nordstrom has served as chairman of the company's board since 2008.)

During Rutherford's tenure, he's cut artificial ingredients and preservatives from the product, removed Nuun from unprofitable channels like drug stores and golf shops, and targeted health-focused national outlets like Whole Foods and Sprouts. He's expanded the product line to broaden Nuun's target demographic from extreme athletes to anyone with an active lifestyle.

He's also started developing grassroots-level connections with individual communities. The company has 4,000 ambassadors in the U.S. and Canada--athletes who endorse the brand, from local influencers to Olympians like long-distance runner Kara Goucher. Nuun's website encourages visitors to meet with athletes near them: marketing with an in-person, real-life touch.

Rutherford's focus on brand evangelism meshes easily with the magnetic enthusiasm of Nuun's 62 employees. "How they show up at a trade show is unique from other brands," says Gillian Stadelman, a senior manager at REI, which stocks Nuun products at its stores nationwide. "If you're not sure where Nuun is, just stick around for 15 minutes. You'll probably see a group of people start to cheer and do squats together."

CREDIT: Courtesy Nuun & Company

Eyeing industry giants

Four thousand ambassadors. More than 10,000 stores. Nearly 600 mass participation events--like marathons and triathlons--where Nuun was served last year. That's a lot of relationships to maintain simultaneously. They're all important: Tiny specialty stores, for example, represent niche audiences that form the core of the brand's credibility. Neglect them and the base disappears.

That's why the company has a full-time staffer who makes sure Nuun has an in-person presence wherever its product is featured. Mary Wittenberg worked with Nuun during her stint as global CEO of Virgin Sport, and marvels at that level of dedication. "Working a fluid station on an event day--that's a conscious decision," she says. "They could have easily, easily just said, 'We're going to give you the product.'"

Rutherford, who estimates that he spends 40 percent of his time on the road, wants every Nuun employees to work at least one or two events per year. That's getting harder as the company continues to grow. "It's resource-intensive," he admits. "There's no shortcut."

Having finite resources leads to tricky decisions. The team recently debated the merits of selling through Walmart, which has a massive customer base. Ultimately, its overlap with Nuun's target demographic wasn't deemed large enough yet. "I'm OK knowing that we can't get everybody," Rutherford says, choosing instead to focus on his extant relationship with Target.

That constant tug-of-war between creating new relationships and tending to current ones could make or break Nuun's future growth. It's still tiny compared to the industry's billion-dollar giants--Gatorade and Powerade--but Rutherford is eager to face them down. "My guess is we have to at least be at $100 million or more just for them to take notice," he says. "It won't happen overnight."

 

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