After filing for Chapter 11 bankruptcy protection earlier this month, Vital Pharmaceuticals (VPX), the Florida-based maker of Bang Energy, continued to face challenges both in court and in the market this week, while also advancing its long-awaited web3 ambitions.
Bang Enters the ‘Ultraverse’
“LIVE FOR TODAY, PREPARE FOR TOMORROW!”
That was the declaration of VPX founder and CEO Jack Owoc on Instagram this week, teasing Bang Energy’s dive into the web3 space with its new metaverse platform, the Ultraverse.
Though details on the larger project remain sparse, Owoc unveiled a line of NFTs available on blockchain trading platform OpenSea. The video included with the post showcased branded images for at least three different NFT sets – including two 100-count collections, Bang Logo and Bang_Cyber_Girls, and one 50-count line, Planet Meltdown, featuring VPX’s keto-friendly Meltdown Energy brand.
However, the collections do not appear to have dropped yet. Instead, the company’s OpenSea profile displays four NFTs; three drawings of Owoc and one animated image of the CEO in which his face is removed to reveal a robotic skeleton. The NFTs were all minted seven months ago, have never been sold and have no price listed; however OpenSea users have the option to make offers on the collection. An account in Owoc’s name is listed as the owner of all four tokens.
Owoc has expressed an interest in taking the Bang brand into the web3 sector since at least this summer, telling BevNET in June that the company intends to launch a social media app called ULTRA Social, which is “created and engineered with blockchain technology and has metaverse smart contract, crypto, and NFT capabilities.” Owoc initially set July 4 as a launch date for the app, but it does not appear to currently be publicly available.
National Retailers Rumored to Consider Dropping Bang
As Bang navigates distribution disruptions, online comments sections for the past several weeks – from subreddits to Jack Owoc’s own Instagram posts – have been rife with consumers lamenting a lack of product available at their usual stores. But could the brand soon become even harder to find?
First reported last week by Beverage Business Insights, some national retailers – including Circle K and CVS – are rumored to potentially be dropping the brand chain-wide in the wake of last week’s bankruptcy filing. Though unconfirmed, the report also floated Kroger as another possible chain weighing whether to delist the embattled brand.
Although none of the retailers or Bang immediately returned requests for comment from BevNET today, one DSD company confirmed that Circle K was dropping the brand. The decision follows a court ruling which found Bang’s “Super Creatine” ingredient did not provide sufficient functional benefits despite marketing promoting the drinks as superior to ordinary creatine and potentially treating mental illness.
Hurt by out-of-stocks, the brand’s retail sales slide has continued unabated according to recent reports. NielsenIQ reported dollar sales of Bang fell -26.3% to $1.16 billion in the two-week period ending October 8 and were down -9.4% in the 52-week period. Volume sales dropped -29.9% in the two-weeks and -10.9% for 52-weeks.
Goldman Sachs Equity Research’s Q3 Beverage Bytes survey of convenience channel retailers this week also suggested low confidence in the brand from at least some retailers. Multiple respondents told the firm they “expect distribution challenges to drive price cuts, or expect that the brand will eventually perish,” with 8% of respondents saying they anticipate the brand to lower pricing in the last months of the year and 9% saying they expect price drops in 2023, up from none in the previous survey. Comparatively 42% believed prices would “rise significantly” and 8% said they would “rise modestly” by the end of the year.
Retailer sales growth projections for Bang in c-stores have also fallen steadily throughout the year. In Goldman’s January Beverage Bytes survey, retailers estimated 2% growth for the brand in 2022, with expectations dropping to a -3% decline in April and now -12% in this most recent report.
However, despite the challenges the company is continuing to rebuild its independent DSD network – at last count up to 269 houses, according to Owoc in the company’s bankruptcy announcement – and many retailers suffering out-of-stocks are still taking the brand back on.
As well, VPX announced last week the appointment of industry veteran Kathy Cole as its new COO. Coming to the company from Harvest Sherwood Food Distributors, Cole will help the company to “seamlessly integrate supply chain, distribution, operations, sales, and finance” as it transitions to a “100% vertically operated decentralized distribution model,” Owoc said in a statement.
VPX Cleared to Tap Into $34 Million Credit Line, Despite Monster’s Objections
A bankruptcy judge has allowed VPX to use up to $34 million of its $100 million credit line to support operations as it navigates legal fees and Chapter 11 restructuring, despite objections from Monster Beverage Corp.
According to Bloomberg, the October 13 ruling will allow VPX to “help pay its bills while searching for a more permanent solution to its legal and financial woes.” The company already owes more than $350 million to the banks providing the credit line and has been in default on bank debt since March.
In court, Monster alleged that the line of credit will “unfairly hurt lower-ranking creditors like itself,” the report stated, as the deal between VPX and its lenders requires the beverage company to provide the creditors with “new, better claims to [its] assets when the rest of the loan is drawn, diminishing recoveries of lower-ranking creditors” and argued that the terms of the agreement could possibly lower potential bidding for Bang’s assets in the future.
The judge, however, determined that those issues will be addressed in a future hearing before VPX is allowed to use the remaining $66 million from the credit line.