British American Tobacco Plc invested in startup Tru Inc., a maker of energy and wellness drinks, as the owner of Lucky Strike cigarettes joins a health push amid efforts to move away from tobacco and nicotine.
BAT’s corporate-venture unit Btomorrow Ventures led a funding round of about $3.5 million in Natick, Massachusetts-based Tru. The company sells sparkling beverages as well as effervescent tablets that it says help with energy, concentration or sleep.
Big Tobacco is eyeing new areas for growth as the number of people smoking decreases across the developed world. After cigarette alternatives such as heated tobacco and vaping created a new segment, companies have been going a step further and exploring ways to move away from nicotine. Marlboro maker Philip Morris International Inc. has pushed into respiratory drugs, while Btomorrow Ventures is helping BAT accelerate its transformation by investing in health and wellness, functional ingredients and science and technology.
“We want to turn Tru into a challenger brand to the billion-dollar players like Red Bull and Vitamin Water,” Tru Chief Executive Officer Jack McNamara, 31, said in an interview.
Tru was founded in 2015 by McNamara, a former professional hockey player, after he observed fellow players who followed vegan or paleo diets consuming sugary sports drinks or energy shots with artificial ingredients before performing in games. The company recently expanded its offering to include beauty drinks that feature ingredients like collagen and biotin that promote healthy hair, skin and nails. The products are available at more than 500 stores in the US, including GNC and Wegmans.
Btomorrow Ventures’ well-being and stimulation portfolio already includes other beverage brands like Moment, which says its products help increase alpha brain waves, much like meditation, More Labs, whose blend of electrolytes claim to help avoid hangovers, and Unrooted Drinks, which makes shots that contain baobab fruit, considered a superfood.
In June, Canada’s Trait Biosciences Inc., which owns patents for a technology that makes water-soluble CBD, said it had secured investment from Btomorrow Ventures.
Coca-Cola Co. leads the nascent $4 billion functional bottled-water industry in the U.S., dominating almost 50% of the market with its Smartwater and vitaminwater brands, according to Euromonitor International data. In energy drinks, worth about $18 billion in the US, Monster Beverage Corp.’s Monster holds the crown with 42%, followed by Red Bull at 25%.