Great. Hello everyone. Good morning. Welcome. Hi, my name is Hilary Milnes. I am the Americas editor at Vogue Business, and I am joined this morning by Kat Cole, the CEO of AG1. Hi, Kat.
Hi. Hello. Hi, everyone. Good morning. Bright and early on the last day. Yeah. Here we go.
So, AG1 is one of the most recognizable names in supplements today. Three years ago, it was valued at 1.2 billion, doing around 160 million in revenue. Today you're doing about three times that, 600 million. So, you know, we can do the math. And that is all off of one product, a daily health drink. So, how do you maintain that momentum?
It has been incredible momentum. For those who don't know, AG1, formerly known as Athletic Greens, is this incredible high-quality daily health drink trusted by Olympians, pro athletes, busy parents, professionals, fitness enthusiasts. And while it is green, it is so much more than greens. It combines a multivitamin, pro and prebiotics, and then phytonutrients, the green part. And the thing that's driven our growth, even though we get so much attention for being early to more modern ways of marketing, so earlier to the creator economy, earlier to podcasts and very dominant in those areas. Even at our peak of leaning into that, it was still a minority of our source of traffic. It was a minority of our customer acquisition. Our customer growth has been and continues to be driven by one lead factor, and it is recommendations and referrals by existing customers. It's a subscription business, 90% subscription business. So, it's a daily health drink. It lends itself to subscription. We don't need to heavily market or convince you to subscribe. If you drink it, it supports your nutrients and gut health. You feel better. You believe in the science behind it. You drink it every day. A subscription is much more convenient than maybe some alternate approach. So that compounds over time. High quality product. It's been innovated many times over the years. Upgraded ingredients, upgraded research. So we keep making it better so that we disrupt ourselves and that helps us stay out front raising the standard while the competitive landscape changes.
And you mentioned, you know, the innovation over the years. So, it's actually been around for 15 years now. And you joined the company in 2021, became CEO last year. So, tell us, how have you seen the supplement landscape change in those 15 years? But then, you know, I would say even in the last four, we've seen a massive shift.
I'll touch on a few things that have changed over the longer arc. And I'm sure we've seen this in many of your industries, even if you're not in supplements or wellness or F&B. One big shift is just we as consumers are smarter, we're more informed, we're more disciplined, we do more research, and that's more prominent in certain categories more than others. It's become far more accelerated in the supplement space for very good reasons. If you're putting it in your body, you have access to research. People want to know more about what they're putting in their bodies. And that's changed over time. What else has changed, at least in supplements, is the level of rigor and sophistication of the companies in the space. And so in the early days, you know, you'd think of like old school multivitamin brands or maybe the early probiotic brands, but there wasn't much else. Now there's a proliferation of individual vitamins, blended supplements like ours that are more comprehensive, and then there are degrees of premiumness within that. Something less expensive that may or may not mean lower quality, some mid-tier where you get a mix of both price point increase as well as quality investment. And then you get into the premium space. So there's been a premiumization of the supplement category that we've been one of the leaders in, that's led by massive investments in high quality ingredients, manufacturing and supply chain that didn't exist even 5 years ago. I mean, some of our high standards on heavy metals, contaminants, just quality of manufacturing. It was difficult to find manufacturers large enough who could meet our standard. Now, because we found those and expanded our manufacturing to the US, we're helping, along with other great companies, to accelerate the supply chain of manufacturers that can manufacture higher quality supplements, which then makes it possible for more premium brands to enter the space. And then what hasn't changed is we started DTC before it was cool and we're still DTC 15 years later, 100%. That will change in the future. At some point you get to a scale where in order to reach the next ring out customer, to your question, how do you continue that growth? We need to meet our customers where they are. And they're not all online. We're online and our businesses are online, but there are many customers who prefer to purchase anything, or in particular a consumable, in a place that they can touch and feel and try. And so that's going to mean expanding into more traditional retail at some point.
Interesting. We'll get to that. I want to first talk about wellness as a category. We've seen it change drastically. It's really top of mind for people. I would say it's almost become a buzzword at this point. Everything is wellness. There's, you know, supplements as part of that. Sleep is wellness, sexual wellness. And, you know, at the same time we're seeing a shift back to diet culture driven by the Ozempic era. So it feels like there's a lot of activity, a lot of competition, a lot of misinformation. How do you navigate that? How do you tread carefully and make sure you're, you know, staying in your lane, but also building that trust with your customers?
Well, you just touched on something that I think is part of our success and our formula is staying in our lane. I think we're the extreme case of staying in a lane. We've done one thing for 15 years and not anything else, possibly even to a fault. There is an opportunity for us to expand a little in the near future, but we've been rewarded for that focus. So for us, as wellness has evolved to be mind, body, soul, spirit, gut, brain, all of the longevity, right? Wellness has almost started to take a sharp turn into everything wellness being bucketed under longevity. Of course, they're related. If you're well, your life quality and potentially lifespan will be longer. But we've chosen not to try to be all those things to all people, to say AG1 is nutrients and gut health. It is daily morning routines of something that gives you nutrients and gut health support with these high quality ingredients that taste good enough to actually drink it every day in the most bioavailable form, which is what most closely mimics food. And we stay focused on that as the world of opportunity has expanded. Look, we've been tempted. We have customers that are like, please make protein, you know, please make this, please. We've got a lot of requests from customers to make more versions or different things, but we've said while we could, AG1 is incredibly differentiated. It is super hard to make. There may be lower cost knockoffs and lookalikes and things that are out there. I wouldn't give them to my family, right? And so this idea of staying focused, not getting distracted, but yet recognizing where research is moving. There's more research on gut health now than there ever has been and AG1 supports gut health. So one of the things we did is we saw that body of research being more accessible to the consumer is started layering on a gold standard of investing in double-blind randomized placebo-controlled clinical trials, which is a mouthful, but it's not something that supplement companies, most of them, even have. Most companies, even like us when we started, start with research on the ingredients. You use that research. You make the thing, putting those things together, and then you market those benefits that are research-backed. If you are a high integrity marketer and want to be compliant with the FTC, which we are, not all are. Then we realized the consumer is going to a more sophisticated place. So, we need to invest millions in these far more rigorous trials. So last year, actually the last few years, we pulled back our marketing spend. Heresy, I know, but we made the decision that instead of just marketing more into the industry's explosion, we needed to pull back a bit to invest in the next curve, which is more clinical rigor being layered on. That's what helps us cut through in the noise. And then if you layer on, you mentioned GLP-1s, you know, while they are a thing in and of themselves and are transforming the world in ways we have yet to fully appreciate, there's a way for AG1 to stay in our lane there as well. One of the things that we know of people who are taking these peptides or these pharmacological interventions is that in many cases, almost no matter the dose, at a mid to high dose, you will end up with a gap in nutrients because you're not eating as much and a need for gut health support. What is AG1? Nutrients and gut health support. So this is where being focused allows us to lean in and be a good partner product. But tapping into a TAM that we couldn't have predicted was going to expand 5 years ago, right?
