Biosteel Sports Nutrition, a prominent player in sports nutrition, has filed for bankruptcy protection. This decision was prompted by financial challenges, including Canopy Growth's decision to stop funding the company, which led to the layoff of 181 employees.
Canopy Growth, primarily in the cannabis industry, owned 90% of Biosteel's equity. However, funding Biosteel became a significant financial burden, contributing to approximately 60% of Canopy Growth's first-quarter losses. This led to Canopy Growth expecting annual cash savings exceeding CDN$100 million ($74 million) while unfortunately laying off 181 BioSteel employees.
Canopy Growth CEO David Klein cited the need to align with a cannabis-focused, asset-light strategy as the reason behind discontinuing support for Biosteel. Despite substantial year-over-year revenue growth, BioSteel's operating losses no longer fit Canopy Growth's evolving business strategy.
BioSteel, founded in 2009, initially supplied NHL teams directly with its sports drink, even though Gatorade was the league's official partner. The company secured partnerships with NHL stars, including Connor McDavid, Nathan MacKinnon, John Tavares, and Connor Bedard, aiming to establish itself in the competitive sports drink market.
With Gatorade, BodyArmor, and Powerade dominating the top three spots in the U.S. sports drink market, BioSteel aimed to secure the fourth position. This decision to seek bankruptcy protection marks a significant turning point for the company as it navigates financial challenges and reshapes its future in the sports nutrition industry.
