Saxx Underwear Co. Ltd.’s has a new owner.
The change comes through a strategic investment from TZP Group, making it the majority stakeholder. The Canadian men’s underwear brand did not disclose the terms of the investment, which also provided an exit strategy for Los Angeles-based private equity firm Brentwood Associates.
Brentwood has been an investor in Saxx since December 2016. It launched a sale process back in March. NLS Group Holdings Inc., led by Krystal Growth Partners, will retain a “significant” minority position in the underwear firm.
“Creating the iconic BallPark Pouch was the beginning of a new era in men’s underwear, and epitomizes our company’s obsession with comfort and innovation. Since then, we have set the standard in this category and become the leading men’s premium underwear brand in Canada,” Wendy Bennison, CEO of Saxx, said. “This transaction supports the significant opportunity we see to strengthen our leadership position as the best in solving male discomfort and to further expand the Saxx brand globally. TZP’s expertise in brand expansion and digital transformation, as well as their track record of driving omnichannel growth for leading consumer brands, makes them the ideal partner to bring our coveted, patented technology to the world.”
“Since its founding, Saxx has pioneered technical performance in men’s underwear and disrupted a category through innovative and technical design that didn’t exist previously,” Dan Galpern, Partner at TZP, said. “Through its patented technology and unique design, Saxx offers a truly differentiated product with substantial growth opportunities into both new categories and markets.”
According to Grand View Research, the global men’s underwear market size was valued at $29.41 billion in 2018, and is expected to have a compound annual growth rate (CAGR) of 5.3 percent from 2019 to 2025. It estimated the market size value in 2020 at $33.07 billion, with a revenue forecast of $42.22 billion in 2025.
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“Millennials are driving the demand in the men’s underwear market as they are more receptive to new and different products than other generations. High demand for new and innovative products in terms of color, fabric, print, and style among millennials is creating opportunities for the manufacturers,” the research firm said.
Boxer briefs in 2018 held the largest market share at 33.0 percent, with trunks—gaining popularity among millennials and Gen X—estimated to register the fastest CAGR from growth 2019 to 2025. The preferred fabrication is cotton, which held the largest market share at 68 percent in 2018. By region, Asia Pacific was forecast to be the largest and fastest growing market for men’s underwear, helped by high demand in China and India. The Asia Pacific had a market share of 40 percent in 2018, with a CAGR of 5.9 percent between 2019 to 2025.
With a huge global market in place, other firms are finding ways to up the stakes. Sportwear firm Nike has a Move to Zero initiative and is zeroing in on undies. Earlier this week it unveiled its Nike Dri-Fit ReLuxe men’s boxer brief, comprising 75 percent recycled polyester to reduce waste and carbon emissions. And in December 2020, it was disclosed that global footwear superstar Neymar signed a three-year deal with U.K. firm Superdry championing organic underwear and sleepwear. The move is part of Superdry’s sustainability pledge.
As more companies set their sights on men’s underwear, it should be of no surprise that legal disputes are also rising as firms seek to secure their turf. Irrevent underwear brand Shinesty in May sued Tommy John for infringing on its signature trademark, the Ball Hammock.
Saxx was founded in 2006 by Trent Kitsch. The brand is best known for its 3D hammock-shaped pouch built into each pair of men’s underwear. The brand has since expanded to include premium, high-performance men’s apparel targeting an active lifestyle. The product line includes activewear, sleepwear, basewear, loungewear, swimwear and socks.
The brand is sold in over 5,800 retail doors across North America, the U.K., U.S., Europe, Japan and Australia.
“Since its inception, Saxx has experienced rapid sales growth of 26 percent compounded annually over the last five years, with e-commerce sales growing an impressive 60 percent year-over-year in 2020 alone,” the underwear firm said.
The TZP investment will help Saxx’s growth strategy and expansion into new markets, while it continues to build out existing markets. Also on the agenda is the expansion into new product categories, and with it related retail distribution opportunities.
“We are so confident in the ongoing opportunity, we have chosen to retain a minority interest in the company. There remains a tremendous opportunity in the next phase of growth bringing innovative performance products to the global market,” Terry Holland, Saxx board member and managing partner at Krystal Growth Partners, said.