Awake Chocolate is poised to triple its sales revenue for caffeinated confectionery snacks in the coming years, leveraging fresh funding.
The Canada-based maker of functional chocolate bites and bars has secured C$8m ($5.7m) through a capital raise led by the venture-financing arm of British American Tobacco (BAT).
Adam Deremo, who co-founded the business in 2012, shared with Just Food that Awake Chocolate aims to achieve C$29m in sales this year, a target it is on track to meet.
Notably, Chief Executive Deremo confirmed that 80% of the company’s sales currently come from the US market. Later this year, Awake plans to expand its distribution through a new listing in Costco. It is already available in major Canadian grocers such as Loblaws and Sobeys.
With significant growth potential, Deremo believes Awake Chocolate can reach C$100m in sales within the next two to three years.
“We have numerous distribution opportunities remaining in North America, especially the US. Additionally, we have exciting innovation opportunities to introduce new products to the market. We believe this combination will enable us to scale to C$100m in revenue,” he stated.
Previously, Deremo noted a trend he observed in other product categories: “If a product achieves C$10m in sales in Canada, it’s likely doing C$100m in the US.”
To date, Awake Chocolate has raised C$15.5m from investors, with most funding secured since the Covid-19 crisis in 2021.
BAT’s Btomorrow Ventures (BTV) has become a minority investor, contributing across four rounds in as many years. Deremo and his co-founders, Matt Schnarr and Dan Tzotzis, continue as majority shareholders.
This partnership appears unconventional, given BAT’s background as a tobacco conglomerate.
Deremo elaborated: “We connected with BTV back in 2021, aligning with their corporate strategy to diversify beyond tobacco. They specifically seek functional food and beverage brands to leverage their existing sales infrastructure in retail, particularly in convenience and gas channels.”
Initially targeting college students in search of energy alternatives, Awake expanded from a “campus-exclusive brand in Canada” to the broader US market.
Through these efforts, the company successfully entered the foodservice channel, collaborating with entities like Compass, Sodexo, and Aramark, thus gaining access to business canteens and hospitals.
In Canada, Awake’s retail presence extends to Loblaw’s pharmacy unit and Shoppers Drug Mart, while recently launching in convenience channels like Circle K and Shell. 7-11 stores are next on the horizon.
In the US, Awake Chocolate will soon have listings in Costco throughout the Southeast and Los Angeles areas, complementing its presence in the Meyer chain, Fresh Market, and Fresh Thyme.
“We’re currently reviewing partnerships with national retailers. I remain optimistic about rolling out several of these next year,” Deremo concluded. “We have the potential to grow our business three or four times from its present state with these partners.”
With the new capital infusion, Awake Chocolate aims to expand its team to accelerate growth and enhance production capacity with its two co-manufacturers. Furthermore, innovative products, including those with functional ingredients beyond caffeine, are in the pipeline.
“The current cocoa market poses challenges for us and for every chocolate company. Therefore, we must explore adjacent categories where we can continue to create delicious snacks while being less reliant on cocoa as a commodity,” Deremo explained.
