The supplier of Prime, the energy drink cofounded by Logan Paul — the controversial YouTuber known for posting in Japan’s ‘Suicide Forest’ and being accused of promoting a series of crypto “scams” — is suing the beverage company, accusing it of cutting ties when demand for the once red-hot drink cratered and owing at least $67.7 million.
Refresco, a beverage bottling giant that employs 14,500 employees, per its website, says in the lawsuit that Prime Hydration breached a 2023 contract in which the energy drink company committed to ordering a minimum of 18.5 million cases — or 222 million bottles — annually over three years or a total of 55.5 million cases cumulatively over three years. In exchange, Refresco invested in an exclusive and custom production line for the drinks, which required “large upfront expenditures” and “considerable investment of time (including production line downtime),” the complaint, filed on August 2 in the Delaware Court of Chancery.
Refresco accuses Prime of failing to order the required amount during the first year of the contract, incurring a penalty payment. The penalty, which was not specified in the lawsuit, could be repaid at the end of three years if the company were to order 55.5 million cases in total, the company said in the complaint.
Paul launched Prime with fellow YouTuber-turned-boxer Ksi in January 2022, and the energy drink was a white-hot success. Thanks to a series of marketing stunts, big-name sponsorships, and a few limited flavors, supply couldn’t keep up with demand, and resellers — some in the playground — were reselling the drinks at markups.
In November of last year, Bloomberg reported that the company was profitable and on track to surpass $1.2 billion in revenue for the year.
The original agreement with Refresco, made in April 2023, was based on the high demand Prime was experiencing at the time, according to the complaint.
But by 2024, “sales of PRIME beverages were falling well below Defendants’ expectations,” the Refresco’s lawyer wrote in the complaint, adding that while the decline was partly seasonal, it also involved “fading social media buzz” and a series of lawsuits.
In March, Prime representatives did not show up for a mandatory test run of the new machinery, Refresco said. By April, Prime had not placed any beverage orders and told Refresco the contract had been terminated, the complaint said. By that point, not one unit of Prime was bottled from the new production line.
Lawyers for Refresco and multiple representatives for Prime did not respond to requests for comment from Business Insider on Monday, August 6.
It’s not the only lawsuit Prime is facing. Last month, the US Olympic and Paralympic Committee sued Prime, accusing it of mismarketing itself as being affiliated with the Games and Team USA — an affiliation reserved for official sponsor Coca-Cola. The complaint alleges trademark infringement and seeks “millions of dollars” in compensation. Prime has not yet commented on the lawsuit.
In late April, a class-action lawsuit was filed accusing the brand of mislabeling the amount of caffeine in each drink. Prime filed a motion to dismiss the lawsuit. A similar lawsuit filed in 2023 was voluntarily dismissed.
Even Sen. Chuck Schumer weighed in on the amount of caffeine in the drink, asking the FDA to look into the amount per bottle and how it was marketed. Across Canada, Prime was recalled due to its high caffeine levels.
The company was hit with another class action lawsuit in 2023, this one alleging the drink contains a level of PFAS, also known as “forever chemicals,” that is at odds with its marketing as a healthy drink. Lawyers for Prime have filed a motion to dismiss the suit.
“First off, anyone can sue anyone at any time. That does not make the lawsuit true. And in this case, it is not,” Paul said in an April 2024 video response to the suit. “There’s claims that PFOS, or forever chemicals, come from plastic. So, in this case, they’re not talking about the actual drink, the liquid — Prime — they’re talking about the bottle that Prime is manufactured in. This ain’t a little rinky-dink operation. We use the top bottle manufacturers in the United States.”
Do you work for Prime Hydration or have a tip about the company? Reach out to the reporter at mberg@businessinsider.com.
Read the full article here
