USA – US bottler Refresco has filed a lawsuit seeking US$67.7 million from energy drinks producer Prime Hydration and its owner Congo Brands, alleging a breach of a master supply agreement.
The court filing, submitted in Delaware on August 2, 2024, claims that Refresco entered into a production agreement with Prime in 2023, but after investing in its production facility to accommodate the deal, no orders were placed by Prime.
Refresco contends that it informed Prime of the need to set up a dedicated production line at its Truesdale, Missouri, bottling facility to produce Prime’s custom bottles. This setup required substantial upfront expenditures and time.
According to the lawsuit, Prime agreed to a production fee and a three-year minimum purchase volume commitment, which required Refresco to produce 55.5 million cases of Prime over three years.
The agreement stipulated that Prime would be required to pay a shortfall fee for each unpurchased case if It failed to buy at least 90 percent of the produced volumes each year.
Prime Hydration, launched by internet celebrities Logan Paul and KSI in 2022, quickly gained popularity, with bottle prices soaring due to high initial demand.
However, Refresco claims that by 2024, sales of Prime had fallen below expectations. Refresco attributes this decline to seasonal demand fluctuations for sports drinks and the waning social media buzz that initially drove Prime Hydration’s rapid sales growth in 2022 and early 2023.
Refresco asserts that it completed the dedicated production line for Prime products in 2024, with final testing scheduled for March.
To conduct the test run, Refresco required materials, ingredients, and some of Prime’s employees. However, Prime allegedly refused to submit initial orders and repudiated its Truesdale production agreement.
Refresco claims that Prime committed no volume numbers or orders and indicated plans to move away from production at the Truesdale facility.
Prime’s response to Refresco’s lawsuit states that it never agreed upon or executed a master supply agreement, which Refresco asserts was binding from April 3, 2023.
Refresco is seeking US$67.7 million in compensation for the dedicated line upgrade, including the development of molds for Prime bottles, and for lost sales.
The lawsuit comes after Logan Paul, co-owner of Prime, recently denied allegations that the drinks contain harmful “forever chemicals.”
A US consumer class action lawsuit filed in a California US District court claimed that Prime’s grape flavor contains dangerous synthetic chemicals.
In response, Paul stated that Prime uses top bottle manufacturers in the United States, similar to brands like Coca-Cola, Pepsi, and Tropicana, dismissing the allegations as unfounded.
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