5xing Black Rifle Coffee into an Icon

🧠 The Takeaways

Today, we’re buying Black Rifle Coffee, getting this biz back to growth + following Red Bull’s path to iconic alt right beverage brand.

1. Become the official coffee sponsor of the NFL, College Football and other “badass” sports leagues.

2. Sponsor + integrate more deeply with Esports (specifically Military/Gun games)

3. Create an iconic drink (think Red Bull Vodka).

+ Why I always run the Q3 Test Promo

LBAB! Community - The Q3 Test Promo

You need to have 1 major promo in September/October: I call it the test promo. 

It can’t be as good as BFCM/Holiday, but it should be big enough to serve as a dry run for the holidays.

Think of this as Formula 1 qualifiers. 

Drive the same track before the real race begins, so you know where you need to push and what curves will cause a crash.

E.g., If your BFCM promo is 30% off sitewide + Special products. This might be 20% off specific collections.

Throwing a meaningful volume of traffic at your site for (Back to School, Labor Day, Halloween) will test your:

• Supply chain

• Tech Stack

• CS team

• Email/SMS responsiveness

• Warm up ad audiences.

• Customers’ buying appetites

There’s nothing worse than a surprise when it’s too late to correct + there’s no real way to test an event as large as BFCM without treating it like a major promo.

The other important benefit is it gives you a cash injection during the worst cashflow period of the year. You’ve loaded up on inventory that won’t sell for 2-3 more months. 

This clears out more inventory now. Go into the holidays with a stronger catalog + cash position.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Black Rifle Coffee (if ‘Murica was a coffee brand) is trading profit for growth, and the market hates it. They aren’t losing too much money every year. But topline is stalling, which is never a good sign for an unprofitable public biz.

• Share price: $2.03

• Market Cap: $503m

• L5 Performance: -79%

• P/E Ratio: N/A

Wall St. has some patience for a growing, unprofitable biz, but that evaporates when you stop growing.

Financial Summary

2024 Financial Statements (YoY Comparison)

Sales: $391m (-1%) 👎
Gross Profits: $161m (+22%)👏
OPEX: $157m (-12%) 👍

Net Income: -$2.9m (+476%) 👍

Link to Company’s earnings

TLDR Analysis: Crawling to profitability

• Flat Sales (-1%) are never a good thing. 😰

• Gross Profit jumping +22% in 1Y. 👏

• Barely losing money. Almost Profitable. 🤞

It ain’t pretty, but these types of moves are crucial for this brand to be successful long term. 

They’re in a little bit of a trap: they aren’t spending enough on Marketing (9% of Revenue), but they’re not big enough to invest more in Marketing in order to grow.

It’s time to get creative with how we get this biz to the scale where it can profitably scale itself.

Let’s Fix This Biz

Here are our 3 moves to flip this to the gun-toting Starbucks it’s meant to be.

1) Become the Official Coffee Sponsor for Major Sport Leagues.

BRC has already done this with the UFC. 

Hockey has Tim Horton’s, but the NFL and MLB don’t have an official Coffee Sponsor.

They have a perfect opportunity to break into the largest sports advertising markets in the world with their “Badass branding.” Especially focusing on the “manly men” sports.

The NFL is the best fit but the most expensive, so College is the next best thing. Plus, it’ll  also tap into College students’ caffeine budgets. 

Start with schools with big Local footprints + national awareness (SEC/Big Ten) will be a big bang for their buck. Sponsor a couple of games, events on campus, free samples.

The natural sponsorship infrastructure these programs have is the perfect feeder system to quickly scale with a national program that feels grassroots..

At the end of the day, the main biz model is to remind people to buy and use your product more.

Takeaway: Clearly Define your customers. Be everywhere they are.

2) Get into Digital Sponsorships

The more interesting + creative avenue for Black Rifle Coffee to invest: Esports/Streaming.

Tons of Video games are military/gun related.They have a never-ending list of opportunities to weave their products into digital experiences.

Gamers = another group of young men seeking heroic experiences/baddass-ery who consume a lot of caffeine to play said game. 

Call of Duty or Counter-Strike would be ideal (probably too expensive) options, but there are a long list of gun-related video games that come out every year.

Naturally weaving BRC into a highly addictive, repetitive habit will be a great opportunity to capture more new customers and drive them to consume more of the product.

The beauty of Esports/video game sponsorships is they can more easily be weaved into digital advertising campaigns (social, search).

Takeaway: Digital Advertising isn’t just Social and Search ads.

3) Create Natural Cocktails for their products

Red Bull had a meteoric rise using most of this playbook, with 1 iconic play that defined the brand.

Creating Red Bull Vodka.

The best move BRC made for the biz last year was doubling down in Ready-To-Drink: coffee-in-a-can drinks + energy drinks you can pick up in supermarkets.

The next step: find that drink that goes so well with their products it’s a must have. That is what propels a niche coffee brand into the mainstream. Or a disgusting sugary energy drink into 1 of the most iconic cocktails of all time.

I can’t imagine many of their core customers ordering an Espresso Martini (Coffee + vodka), but add a badass name + better fitting ingredients (Whiskey?) they can’t create the version their customers will love.

They’d be competing in the Jack & Coke space, but as more consumers choose coffee and energy drinks > soda, BRC has the opportunity to create a genre-defining drink that changes the arc of the brand.

Takeaway: What is the iconic version of customers using their product?

Final Thought

At a certain point, you need to outgrow who you look to for inspiration. 

BRC has called themselves a DTC brand for a decade, but at this point, Red Bull is a better comp for them to study vs. Warby Parker.

When push comes to shove, BRC is a 40% GM Food & Bev Retail biz. 

Red Bull is a great playbook for them to replicate now they have the brand, distribution (Walmart, 7/11), and their own “Outposts” (owned coffee shops).

BRC must finish Red Bull’s playbook:

• Sponsoring obscure sports their customers love. ✅

• Creating media their customers respond to + will consume.  ✅

• Creating iconic drinks.❓

• Becoming a major supplier of bars/restaurants.❓

With flatlining sales, the team’s entire focus has to be on scaling acquisition + driving customers to buy more.

The team’s entire focus at this point needs to be all on Marketing. 

Spending <10% of Rev on Marketing ain’t going to cut it.