Prime gets hit with $68 million lawsuit–its biggest one yet

A third lawsuit has hit Logan Paul and KSI‘s Prime, this one from a beverage bottling partner suing it for $68 million over alleged breach of contract. The suit also paints Prime’s sales performance in poor light, saying the brand has seen major fall-off over the last year. We just covered how creators can’t rely on “maverick” marketing and their subscribers’ wallets to keep a company going forever, and this lawsuit illustrates further that creators who get into big business need to understand big business.

Refresco Beverages US Inc. says it and Prime had a three-year agreement with a built-in minimum purchase agreement of 90%. Basically, Refresco would produce a certain amount of product, and if that product didn’t sell, Prime would still have to pay an agreed-upon fee per case for 90% of it.

According to the suit, things were going well during Prime’s big surge of hype driven by Paul and KSI’s legions of fans. But then, “[o]ver the course of the year following that contract signing […] the formerly ‘hot’ sales of PRIME sports drinks cooled markedly,” it alleges.

“By early 2024, sales of PRIME beverages were falling well below Defendants’ expectations. Drivers of those declining sales included seasonal declines in demand for sports drinks that Defendants had failed to predict and, even more problematically for Congo/Prime, the fading of the social media buzz that had powered the rapid initial increase of PRIME Hydration sales in 2022 and early 2023,” it says.

Refresco alleges that on top of those issues, Prime’s sales were affected by the other two lawsuits it’s currently facing: one $5 million class action suit for deceptive labeling/marketing and the presence of “forever chemicals” in its packaging; and one multimillion-dollar suit from the Olympic Committee for copyright infringement over marketing materials it produced for its collab with Kevin Durant

Refresco says its contract with Prime involved it outfitting one of its production lines in Truesdale, Missouri to exclusively produce Prime drinks, with new equipment that could make bottles fitting Prime’s design and trade dress specifications. Setting this up required “large upfront expenditures” by Refresco, it says. Once the changes to the Truesdale factory were made, Refresco arranged a final approval meeting with Prime so production could kick off. But Prime “refused to participate in the final test run” for the equipment, and “refused to submit initial orders to begin commercial production,” Refresco alleges.

Eventually Prime repudiated the agreement altogether, leaving Refresco on the hook for all the money it’d spent on outfitting the Truesdale factory–which is why it’s now suing for a hefty $68 million. That figure covers its own costs plus “the profits it would have earned” over the course of the three-year deal, per the suit.

According to Bloomberg Law, Prime hasn’t made a court appearance for the case yet. It’s worth noting competitors like Gatorade and Powerade have also faced numerous lawsuits–including, most recently, one from a champion athlete who alleges its product caused a false doping positive (Gatorade), and a class action claiming Coca-Cola’s “50% more electrolytes” advertising is misleading (Powerade).

We already knew Prime’s sales were down (they’ve dropped 50% year over year in some places), but this lawsuit’s allegations point to serious concerns about the longevity of the brand. Fan fervor can be an excellent kick-off for a product, but if the product can’t stand on its own–especially a product that’s gotten shelf space in thousands of big box stores, gas stations, airports, and more around the world–creators might want to think twice about getting into expensive, long-term commitments.