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Thursday, Oct 6, 2022

New Monster in Town: Energy Drink Co. Raises $29M

Newport Beach-based A Shoc Energy, which says it is making the next generation of energy drinks that are “charged by nature,” this month raised $29 million in a Series B funding round led by existing investors and prominent athletes.

The company originally sought $18 million, which it increased to $29 million because of demand, Chief Executive Paul Nadel said.

“It’s the product and the market—it was much easier than I anticipated,” Nadel told the Business Journal.

Nadel’s pitch to investors was an easy one.

“We are in complete growth mode,” he said.

A Shoc is also in an industry where valuations have soared in recent years.

 Its products are currently available in about 80,000 retail locations across the U.S., including 7-Eleven, Walmart and Target.

Growth Industry

The energy beverage and natural sports drink industry, and A Shoc, both count several notable Orange County connections.

The company, also known as Adrenaline Shoc, was co-founded in 2019 by Scot De Lorme, who was vice president of innovation at Corona-based Monster Beverage Corp. (see story, this page).

Currently valued around $45 billion, Monster (Nasdaq: MNST) is run by Rodney Sacks and Hilton Schlosberg, who are now two of Orange County wealthiest residents and among the area’s largest private investors in commercial real estate.

The other co-founder of A Shoc is Lance Collins, who has founded several beverage brands, including BodyArmor, which was bought out a year ago by Coca-Cola Co. for $5.6 billion.

One of BodyArmor’s early investors was the late Kobe Bryant, whose estate received an estimated $400 million from the sale, according to the Wall Street Journal. Another BodyArmor investor was Los Angeles Angels star Mike Trout.

Collins also founded Core Nutrition, which was sold for $525 million in 2018 to Keurig Dr Pepper (Nasdaq: KDP), which has a $52 billion market cap.

Athlete Investors

Keurig Dr Pepper, as well as Collins and 7-Ventures LLC, the venture arm of the 7-Eleven Inc. convenience store chain, made the Series A investment in A Shoc in 2019.

Keurig Dr Pepper and 7-Ventures also participated in the latest $29 million Series B.  

Other investors in the latest round include Pro Football Hall of Famer Michael Strahan, New York Yankees outfielder Aaron Judge, Los Angeles Dodgers first baseman Freddie Freeman, skateboarder Paul Rodriguez and golfers Lexi Thompson, Bryson DeChambeau and Brooks Koepka.

Two other investors, Washington Commanders defensive end Chase Young and Nascar driver Chase Elliott recently met at a racing event that A Shoc promoted as “Chase meeting Chase.”

New Energy Drink Style

A native of Los Angeles, Nadel earned a law degree and practiced as a corporate and securities lawyer before running an early stage investment fund in the 1990s. He tried sports management, including a stint as an agent and media management before becoming involved in energy drinks, including serving as the CEO of Collins’ Core Nutrition.

A Shoc is marketing its product as free of sugar and preservatives.

“We thought it was a good time to come in with a 2020 version” of Monster and Red Bull, Nadel said.

About 20 years ago, “Counting grams of sugar and preservatives wasn’t important at that time. Now, people do care about what they are ingesting.”

“We think there’s a new consumer out there. We have a healthier version, but it also tastes great. If you’re a discerning customer and get under the hood, you’re happy.”

Nadel declined to reveal the company’s most recent valuation nor say how much it’s generating in annual sales. The company has a master distribution agreement with Keurig Dr Pepper, giving it a national advantage when it started, Nadel said. Keurig also has an option to buy A Shoc.

Charged By Nature

While not yet profitable, the company’s growing ahead of competitors at this stage in their development, Nadel said.

The company currently has 70 employees with plans to expand to as many as 90 this year. It contracts out the manufacturer of its drinks to facilities around the country.

It will spend the money to expand further, particularly in marketing efforts.

“Our messaging is unique in our space,” Nadal said. “It’s great to know we’re charged by nature.” 

A Shoc’s Ties to Monster Beverage

Scot De Lorme, co-founder and president of Newport Beach-based A Shoc Energy, says he “stumbled” into the beverage business in the 1990s.

“I never planned on it. I was always a brand concept guy,” he said.

Through the father of a friend, in 1995 he became a founding partner at a Bahia Beverage Co., which was sold in 2003.

Then he started PRE Beverage Company, which made a pro-biotic drink “that was way ahead of its time,” he recalled.

His company in 2011 was bought by Hansen Natural Corp.

At the time, “they were selling this little brand called ‘Monster’ down the hall,” he recalled.

Hansen in 2012 was renamed Monster Beverage Corp. (Nasdaq: MNST), which now sports a $45 billion market cap.

He became vice president of innovation at the Corona-based energy drink giant, where he worked on the formulas, flavors and can designs, reporting directly to company’s top execs, Rodney Sacks and Hilton Schlosberg.

“It was a fun run,” De Lorme recalled. “It was a great job, a great company. I loved the experience there. Those guys are brilliant.”

About five years ago, the industry saw the emergence of a new category called performance energy, featuring a new type of consumer, what De Lorme called “gym rats” who traditional energy drink companies weren’t targeting.

“These brands you’d normally see at GNC were all of a sudden at 7-Eleven,” he said.

“This new generation of energy drinkers cares about what they put into their bodies. The health and wellness piece is now a big component of what energy drinks are all about.”

Along with a friend he’s known for years, Lance Collins, who has a lengthy track record of success in the beverage industry, the pair started A Shoc in 2019.

“I saw an opportunity to get back out on my own,” De Lorme said.

Traditional energy drinks often have a lot of caffeine and sugar, which of course gives users a buzz and then creates “a crash,” he said. By contrast, A Shoc avoids those ingredients.

“We’re more about performance and the ingredients. We’re so focused on the athletes. They can drink it without guilt.”

The company focuses so much on athletes that its Newport Beach headquarters has its own workout gym where its stars like Los Angeles Dodgers Freddie Freeman and NASCAR driver Chase Elliott can work out under personal trainers.

A Shoc CEO Paul Nadel praised De Lorme’s work.

“Scot’s done a phenomenal job of coming up with flavor combinations,” Nadel said.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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