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Sports drink betting on a 'smarter sugar'

One start-up says its sports drink can help take an athlete's game to the next level. The company has even scored former New York Yankee Mariano Rivera as a partner.

"We're ready to take on traditional sports drinks because they're made of 1960s science," said Nth Degree Innovations co-founder Peter Strahm.

According to Strahm, who was previously a regional vice president for sales and marketing at Red Bull, Nth Degree is a low glycemic sports drink made with "no artificial anything."

The key ingredient is called Palatinose, a low glycemic sweetener derived from sugar beets. The start-up told CNBC it purchases Palatinose from Beneo, a natural food supplier.

Strahm says Palatinose, which is used as a sugar alternative in other food and beverages, digests five times more slowly in the human body than regular sugar and is also supposed to boost energy and endurance.

Strahm told CNBC the drinks are produced by an FDA registered contracted food and beverage packing company in the Northeast, but he would not disclose its name.

The drink comes in four flavors, including fruit punch and lemon citrus, and retails for as much as $2.49 for a 16-ounce. bottle.

The founder told CNBC his drink is sold in major supermarket outlets, along with roughly 500 independent outlets in the New York and New Jersey markets.

Nth Degree sports drink offer four flavors from citrus to fruit punch
Source: Nth Degree
Nth Degree sports drink offer four flavors from citrus to fruit punch

Jean Terminiello, founder of the Big Beverage Company, asked Strahm how Nth Degree planned to expand beyond New York.

"We're working on a lot of change that have direct options," he replied. He added that Nth degree expects to reach Southern California and select Southeastern markets soon, along with the Northeast and mid-Atlantic areas by 2017.

Given the start-up's plans for growth, David Wu, partner at Maveron, questioned whose thirst Nth Degree's target customer is trying to quench. Strahm said he's targeting serious athletes, and not the mass consumer.


However, Nth degree enters a crowded shelf space. Market research firm, IbisWorld, reported that powdered drinks, known as "instant drink mixes," reached $1.3 billion in revenue in 2015, with sports and energy mixes making up a quarter of that revenue.

In addition to powdered drinks, beverages like Gatorade, owned by PepsiCo, and Powerade, owned by Coca Cola, dominate the category.

Alicia Syrett, board member of the New York Angels, was concerned about how Nth Degree would be able to evade direct competition from those major players, who could develop their own low glycemic products.

'We are the only low glycemic and carbohydrate that promotes fat oxidation," said Strahm. In addition, he told CNBC that more low glycemic drinks would actually improve the category.

Nth degree would not disclose revenue, but Strahm did tell CNBC the start-up has sold more than 250,000 bottles since launching in 2010 and that he expects to reach profitability by 2017.

Nth Degree launched in 2010, and developed its new line of packaging in 2015. Headquartered in Edison, New Jersey, Nth degree is family funded with $5 million.

--Additional Reporting by CNBC's Kelly Lin

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