MiTonics

Idea

Introduction

In professional sport, teams of different sized individuals often have an in-house nutritionist who custom-builds a tailored exercise recovery drink for each team member. As the body-type and training aim of each individual varies (think giant second row forward versus small scrum-half), so too does the macro-nutritional dosing within each of the team members' recovery drinks. This is the most effective way of ensuring that each team member achieves optimum recovery from their workout and reaches their training aim in the shortest time possible.

Using a patented vending platform, our aim is to bring this practice into the retail marketplace in an easily managed and intuitive fashion.

Current sports nutrition brands often offer only generic serving sizes to customers (eg, 1 scoop of protein powder or a fixed 330ml ready-made drink). MiTonics allows the customer to easily create their own personalised recovery drink in exactly the same way that they do in the pro sport community for optimum results.

Intended impact

MiTonics machines are stationed within leading gym facilities meaning there is 24 hour availability of the best sports recovery drink on the market at the time and place the customer really needs it - immediately after training, offering ultimate convenience.

The branding and range of drinks in the machine (Muscle Gain, Lean Performance and Diet Meal Replacement) are designed to appeal specifically to the entire gym customer-base unlike traditional products. The availability of the Diet drink and personalised dosing means the drinks are equally applicable to both male and female members. In some cases where MiTonics has been added to an existing range then overall supplement revenues for the gym have been seen to increase. Furthermore, we have been told that where MiTonics has replaced an incumbent brand the comparable supplement sales at the site have increased.

The platform requires the input of some personal data (Training Aim, Weight and Body Fat Ratio). This then leads to deeper engagement between gym staff and their clients as the member is required to think more carefully about their training targets and also gain a basic understanding of body composition - a service that most gyms offer on induction and then as an ongoing supplementary service. In this way, MiTonics pulls together disparate services that gyms offer and provides a tangible medium through which this personal customer data can be put to use.

We see reports from gyms of increased PT (personal trainer) engagement, improved member sign-up (as the gym demonstrates its commitment to cutting edge services), increased member retention, enhanced customer results with accelerated body-change, not to mention an increase in secondary revenues in a highly competitive marketplace.

We aim to help regular gym goers to achieve enhanced results from their training by giving them access to professionally tailored recovery drinks. Globally, we see this as a wholly new category of drink in a sector where true innovation is in short supply.

Substantial accomplishments to date

In 3 years we have taken the idea from Powerpoint concept to formal operational roll-out. We have over 20 machines sited around the UK (including: Nuffield Health, The Reebok Club, The Third Space, Anytime Fitness). Our first overseas machine is off to Dubai to one of the best gyms in the world: the Nad al Sheba Sports Complex.

We received our European Patent (2292126) in May 2012. US patent is pending.

We have sold over 125,000 drinks to date and have developed a highly robust and easily operated platform.

We have tested various financial models and believe we have a strong understanding of the gym marketplace, have developed a clear and effective engagement protocol for our consumer customers, have significant opportunities for scaling the business up in a relatively short space of time and are now ready move ahead on our formal growth strategy. Following our first formal trade advertising campaign in Q1 2014, we have also generated a long list of other active enquiries which we feel further strengthens our proposition.

We have agreed formal trials at two of the largest chains in the UK which, if successful, would lead to national rollout and immediate growth.

We are now set for the formal growth phase of our company life-cycle.

Monetisation strategy

Our business model is relatively straight-forward. We typically retain ownership of the machines and agree a 2yr rental agreement with the site owners immediately providing us a monthly rental income for each asset. The rental income covers the asset cost and allows us to potentially use asset financing for machine purchase from our suppliers.

We then wholesale the disposables (ingredient mixes and cups) to each of the sites at an appropriate margin that provides sufficient margin to MiTonics to support and grow the business and also allows the site owner to make a meaningful return from his/her investment.

The site owner is responsible for servicing the machine, usually on a twice-weekly basis (refill ingredients canisters, refill cup stack, basic cleaning protocol). With the financial commitment from the site in place, we see that the sites are diligent in looking after their machine and actively promoting the service to members. MiTonics is, after all, often a 'point of difference' for them and should become embedded in the customer journey from prospective member through to training strategy and ongoing member progress review.

We outsource as many of the operational elements of the business as we can to specialists (machines built to order, ingredients custom designed by leading supplier, disposables stored and distributed by logistics company, emergency technical support to specialist vending support company) which means we are able to focus almost entirely on marketing.

With the sites as our sole route to market, we view them as partners and are able to focus on experiential onsite marketing, dynamic POS (point of sale) material, development of brand ambassadors at sites, use of social media channels and trade/consumer press. There is a direct correlation between this style of marketing and drink sales, and being our sole route to market, we are able to focus on this, aiming to take market share from traditional brands who view 'in gym' sales as a small contributor to their overall revenue streams.

Use of proceeds

These funds are specifically marked to support two formal 6 month trials agreed with two of the UK's largest gym chains. We expect that a successful outcome of the trials would lead to significant and immediate growth of our estate to over 250 sites by end of 2015.

The first trial is already underway and drink sales here are 200% of the target after just 4 weeks. The site owner is actively promoting MiTonics to fellow site owners and senior management. We expect that the other chain will be installing and starting their trial during July/Aug.

As a company of only 3 people, operating from a modest home office with limited resources, we cannot now support the trials as we would like to, which will negatively impact the likelihood of securing a successful outcome.

The funds would largely be used for trial marketing requirements:

> Trial Account Director
> Junior Onsite Brand Manager
> Enhanced machine graphics
> Onsite marketing collateral
> Branded peripherals
> Office rent
> Vehicle hire x 2