Beer Marketer's Insights
Fever-Tree, which awakened Americans to potential of tonic water with broad range of entries, is turning that expertise to ginger ale side now, extending its Premium Ginger Ale entry with Smoky Ginger Ale, Spiced Orange Ginger Ale and Refreshingly Light version of core sku. The aim, as Brooklyn-based US marketing dir Amanda Stackman pointed out, is to diversify beyond Fever-Tree’s focus on gin, which accounts for only 6% of premium spirits sales, to the dark spirits like whisky and Cognac that account for 60%. The new “expressions” (don’t call them flavors) employ same blend of ginger from Ivory Coast, Nigeria and India’s Cochin region as Premium entry and are launching in influencer on-premise accounts like Bar Sardine, PDT, Saxon + Parole and Red Farm in NY and The Anderson in Miami, as well as in gourmet/specialty channel and online via Reserve Bar, at $5.99 per 4-pack of 200-ml glass bottles. Smoky entry employs Besmoke’s PureSmoke technology to attain liquid that holds its own among dark spirits like whisky, while Spiced Orange employs South African clementines and Sri Lankan steam-distilled cinnamon for ingredient that matches well with aged spirits like cognacs and rums . . . In what seems clear reaction to inroads being made by Body Armor, at time that Gatorade Organic has proved slow starter, PepsiCo is prepping launch this Jul/Aug of Bolt 24, which melds “natural flavors/sweetness, contains less sugar than core Gatorade, and uses watermelon and sea salt for sodium,” per research note last week by RBC’s Nik Modi. It’s due for launch in c-stores, positioned as “off-the-field hydration,” per Beverage Digest. Tho details haven’t been released to the trade, new entry would seem to play upon work that indie brands like WTRMLN WTR and Tsamma Watermelon have done in building consumer awareness of watermelon’s hydration properties. PEP has been claiming strong growth in new Gatorade Zero as it seeks to reignite growth in key franchise brand . . . Grass-fed protein marketer Iconic is incorporating greens benefit in its latest extension, Cacao + Greens, which combines 150 mg of antioxidants from unroasted cacao with 1 serving of organic veggies per bottle. Like rest of line, item delivers 20 g of protein sourced from grass-fed dairy in New Zealand, but just 1 g of total sugar. It offers first green tinge to lineup that so far has consisted of Chocolate Truffle, Vanilla Bean, Caffe Latte, Turmeric Ginger and Coconut Matcha entries, packed in 11.5-oz PET bottles, all with just 3 g of sugar.
Bay Area brand is positioned as “artisan iced teas blended with probiotics and kefir water.” But since that’s a mouthful, The Living Apothecary is going out more directly as Organic Probiotic Tea, as it wrestles with the challenges of being a RTD player in fermented-bev set where brands identified explicitly as kombuchas are making most of the noise, all while building out its self-production capability, assembling its first professional sales and production staff and finally cracking East Coast, more than 6 years in.
Cofounder Shari Stein Curry, who serves as ceo, detailed various branding and marketing dilemmas of her “six-and-a-half-year-old startup” in call today, as co leverages its first institutional round, $1.4 mil brought in last fall, and preps for next one. Her cofounder, Traci Hunt, serves as coo.
The capital round last Oct led by LA Libations and Venice Brands has helped fund some key hires and relocation of fully integrated plant from 6K-sq-ft space in Richmond to 23K-sq-ft space elsewhere in city. Co has never relied on copackers for complex production process that involves brewing tea and kefir separately, then bottling blended product, and it only reluctantly made transition from glass vessels to stainless steel, thankfully without suffering any quality erosion as once feared, Shari told us today. Co now is in process of bringing in ancillary gear that by late Aug should enable co to extend shelf life. Playing a key role in rejiggering things is consultant firm called Red Decimal (see below).
Tho Stein wouldn’t discuss relationship in detail, one reassuring sign that brand is on right track has been durable presence within Trader Joe’s chain, millennial lure that’s famously tough to crack for branded items. Among other key customers of Living Apothecary in core West Coast markets have been Nugget Market, Berkeley Bowl and Rainbow Grocery in Bay Area, and Erewhon and more recently Bristol Farms in SoCal. Brand has tiptoed into Pac NW, in part via Trader Joe’s, and now has gotten toehold in NY via Fairway. Tho brand has been resolute about not getting too far ahead of itself, “it was time to make a move” into East Coast, Stein said. It’s employed some DSD along lines of Rock Island in NorCal but so far has bridled at contractual terms required to crack some of bigger refrigerated players. LA Libations has helped brand crack HEB chain in Tex, like Trader Joe’s a direct-ship account. It’s also entered some Walmart and Costco stores, and is expanding chainwide thru Vons’ Pavilions banners this month. Tho glass bottle, refrigerated supply chain and elaborate production process are expensive, Living Apothecary is able to get brand as low as $2.99 at direct-ship accts, while aiming for $3.49 at West Coast accts and $3.99 at East Coast accts moving thru broadline distributors. Flavors include likes of Hibiscus Apricot, White Tea Lavender, Peach Black Tea and Lemon Black Tea with Tamarind. They contain 2 bil cfu’s and come in at 35 calories per 13-oz bottle, thanks to combo of lemon juice, cane sugar and monk fruit as sweeteners. Co also has launched keg biz in recent months. A line of “fruit-based, superfood kefir water” is in the works, co has said.
On staffing side, Living Apothecary has brought aboard as sales leader Marty DeLaat, former Zico exec fresh off a 4-year run at Chameleon Cold-Brew, now owned by Nestle. As plant mgr, co brought in Michael Spady, from craft beer side at Drake’s and Seismic in NorCal. It’s also brought aboard Presence Marketing as broker.
Shari didn’t disguise challenge of finding space for fermented probiotic bev that’s not identified as a kombucha, often settling for just 3-4 facings not at coveted eye-level spots commanded by bigger kombucha brands. Co recently updated bottle graphics but she conceded it’s a constant work in progress, as co tries to find right route to recognition in cluttered category dominated by kombuchas that often employ opaque production methods. “No short cuts, no vague ingredients,” Shari likes to remind people. She’s banking on Living Apothecary’s commitment to quality and transparency sustaining co thru turbulent period where lotsa other probiotic-oriented entries, including kombuchas, have been swinging for the fences via aggressive national expansions. As some bigger players encounter challenges in finding an exit, she’s banking on those qualities ultimately making Living Apothecary more “acquirable.”
KeVita, Core Vets Offer Facility Design Services under Red Decimal Banner In view of Living Apothecary cofounder Shari Stein Curry, valuable weapon during plant expansion has been outfit called Red Decimal, whose 3 principals all played instrumental role on production side at KeVita and then Core Nutrition. KeVita of course sold out to PepsiCo, while Core was recently acquired by Keurig Dr Pepper. The 3 partners are Nate Patena, who went from setting up high-output KeVita plant using 60-head filler (BBI, Dec 16 2015) to serving as both coo and cfo at Core Water marketer Core Nutrition, along with Jon Ballas (with earlier roles at Neuro, Coco Libre and Sunkist Naturals) and Ben Rush (who earlier enjoyed 17-ride at Anheuser-Busch). Red Decimal offers range of facility design and corporate development services throughout N Amer.
Reed’s Ginger Brew is continuing its pr assault on Canada Dry ahead of Mother’s Day, arming retro-attired women with signs declaiming, “Canada Dry Fooled Your Mom – Try Reed’s for Real Ginger.” It’s part of multi-city effort set for NY, Boston, Seattle, San Diego and LA that builds off Canada Dry’s settlement of class action suit in which co essentially acknowledged there’s no meaningful amount of ginger in its ginger ales positioned as “made from real ginger” and agreed to drop that slogan (BBI, Feb 27). Canada Dry owner Keurig Dr Pepper has rattled legal sabers vs Reed’s but apparently not pursued matter since being rebuffed by LA-based indie altsoda marketer, but that could change as Reed’s turns it into broad-based summer campaign. BBI encountered NY effort by chance today at edge of Madison Square Park, where marketing chief Phil Trotman said it’s part of effort that includes outdoor and digital media elements, including hourlong presence on 14 electronic screens in Times Square late this afternoon as co celebrates its ascension to Nasdaq, which is based there. Buys on Sirius XM and Hulu also are in media mix. Co also will be activating groceries, sending in blitz armies to reset shelves and distribute samples . . . Having newly entered oatmilk fray with brand called Planet Oat, HP Hood has been seeking to get word out via popup stores in Boston, LA and Portland, Ore, staffers said at Well Now healthy-food event last night at NY’s Metropolitan Pavilion event space. Dubbed “Planet Oatariums,” stores feature baristas dispensing coffee confections and baked goods under dome on which are projected constellations. After brief run in Boston, concept heads to Portland next weekend and then on to LA at end of month. Meanwhile, co also is planning push into coffee channel, where product shortages of often-preferred Oatly brand have encouraged entry by range of new players from Califia Farms to Elmhurt Dairy. Planet Oat is out in 52-oz gabletop cartons in Original, Extra Creamy, Vanilla and Dark Chocolate flavors priced at $3.99. They run 90-140 calories per cup. 
Boston Beer Acquisition of Dogfish Head May Be Spur to More, and More Extreme, Beyond Beer Efforts
Acquisition of Dogfish Head Brewing by Boston Beer has been making lotsa waves since formal announcement yesterday afternoon, with observers noting that deal unites two uncommonly pathbreaking beer innovators who once vied in arms race on alcohol levels in beer and have pioneered use in craft beer of ingredients like cranberries and grains of paradise (Boston Beer) and acai and dust from lunar meteorites (Dogfish Head). Key focus of future collaboration mentioned several times in deal announcement is “beyond beer,” area where Boston Beer in particular has been aggressive in building big franchises of cider, hard seltzer and alcoholic iced tea, while nurturing newer experiments in hard kombucha, artisanal hard tea and post-workout beer. By contrast, Dogfish Head’s wild experiments with oddities like palo santo wood and bottle-conditioned malt liquor called Liquor de Malt have occurred mainly within definition of beer, tho it was among first brewers to launch parallel distilling arm. Still, Boston Beer cofounder/ceo Jim Koch said this morning that putting 2 innovative brewing teams under one corporate roof insured that “we’re going to get some magic.” He particularly heralded Dogfish Head founder Sam Calagione’s bent toward incorporating culinary ingredients in his beers as inspiring fresh thinking around beyond-beer forays.
Koch and Calagione were speaking in compact brewhouse of Birreria, rooftop brewery erected at Eataly outpost in NY’s Flatiron District a few years ago by Dogfish Head with pair of Italian partners. (It would have made more sense for pair to have done event yesterday at time of announcement, but Koch insisted on keeping prior commitment to appear at Mellow Mushroom pizza joint, reflecting customer-first priority that Calagione said he’s always respected in rival.)
Lurking quietly on fringes was Boston Beer ceo Dave Burwick, longtime PepsiCo exec who joined a year ago after 5-year run at Peet’s Coffee, where he expanded RTD array under Peet’s and Stumptown brands and orchestrated investments in Revive Kombucha and Forto Coffee Shots. We sought him out for perspective at time that beer and NA bevs increasingly are blurring. Since Burwick arrived, Boston Beer has been on alt-beer blitz, launching hard kombucha under Tura brand name, more artisanal alternative to its Twisted Tea brand under Wild Leaf name and beer-as-hydration entry called 26.2 Brew, named for length of marathon run.
In Burwick’s view, fast growth in Twisted Tea and Truly Seltzer is supporting overall biz enough for it to proceed slowly with some of its more alternative entries. “Unlike hard seltzer, it can be a slow burn rather than a big boom out the gate,” he said. So Tura Hard Kombucha so far has launched only in presumed kombucha hotbed Southern Calif, where Dave said he’s been amazed to observe how many people still don’t know what kombucha is. Wild Leaf, meanwhile, has stuck to a dozen Northeast and Central states with higher proportions of non-chain retail accounts, serving as less sweetened and caloric alternative to Twisted Tea franchise that he compared to Mtn Dew (a brand he once marketed at Pepsi). Boston Beer is also proceeding slowly with 26.2 Brew, 4% ABV entry that contains only 120 calories and is marketed as post-run refresher, along lines of other beers like alc Sufferfest (recently acquired by Sierra Nevada) and non-alc Athletic Beer (profiled here yesterday). It’s national now, but co is looking to “build it the right way,” Dave said, getting involved in running clubs, Boston Athletic Assn and other endemic groups. Interestingly, Burwick remains skeptical of non-alc beer segment, despite big push being undertaken by rival brewers, drawing on his NA bev experience to note that, while Europe has strong beer culture, it has relatively underdeveloped NA bevs, meaning beers are more likely to be accepted there for occasions that in US can be filled by increasingly rich repertoire of innovative NA brands.
Monster Beverage is claiming key victory in Europe that’s effectively blocked rival Bang Energy from launching there. Dutch court ruled yesterday that Bang’s advertising misleads and deceives consumers, in part because it contains only negligible amounts of key ingredient, L-arginine. “The Court found that a consumer would have to drink more than 200 cans per day for a period of 45 days to receive any scientifically significant muscle-growing benefit from L-Arginine,” per MNST statement. (Bang apparently employs L-Arginine rather than Super Creatine in European-targeted items because Super Creatine isn’t considered lawful ingredient in EU, as Monster says was emphasized in Dutch court ruling.) The European action echoes one undertaken in US, where MNST is claiming false and deceptive advertising on grounds that, despite Super Creatine positioning, independent analyses have found there to be no creatine in product. That case is still pending.
Celsius brand has been around 15 years now, evolving thru multiple positioning’s, sometimes as energy drink, sometimes not. Riding wave of interest in energy sub-segment dubbed performance, is it finally about to break out? That’s case that CELH brass was making yesterday as co reported 41% surge in North American revenues in Q1 to record $11.4 mil, as overall sales rose 20% to $14.5 mil. European revenues rose 20% to $3 mil but Asian revenues plunged 96% to negligible $53K as co revamped strategy from go-it-alone model to licensed model with local partner. Net income came in at $11.7 mil, reversing $2.9 mil loss a year earlier.
Tho most attention has been on explosively growing Bang energy from VPX Sports, Nutrabolt’s C4 and Celsius also have been in that discussion, and both have ridden interest to DSD presence and begun to crack both major chains and up-and-down-street accounts. In Celsius’ case, it’s been adding Anheuser-Busch, MillerCoors, Pepsi and KDP houses and just signed NY megahouse Big Geyser, which has sought to replace departed Monster Energy brand with flock of new entries including C4, Phocus and Kitu Super Coffee. CELH ceo John Fieldly termed that “one of the strongest and most transformative agreements to date,” enabling rapid penetration of big market where Celsius has barely had a presence to date beyond vitamin channel and health clubs. Tho authorized in chains like 7-Eleven, CVS and Target in city, Celsius had trouble defending space vs other brands employing DSD partners, Fieldly explained. That problem should be solved now in hands of powerful partner like Geyser.
At retail level, brand has been picked up on national basis by Target and CVS chains. After modest test, Target has picked up co’s Sparkling Watermelon, Kiwi Guava and Orange sku’s and its noncarb Green Tea Peach Mango for 1,200+ of its 1,800 domestic locations, Fieldly said, with remaining doors coming on now. Replenishment has been an ongoing issue within chain, and Fieldly told investors it’s in discussions about cutting over to DSD in regions where brand has a partner. On drug side, CVS has expanded brand from 550-store test to 7,500+ stores with 3 flavors in cold box. CVS was first major drug partner but Rite Aid has also come aboard lately, in 2,300 of its 3K stores. “We are talking with Walgreens as well,” Fieldly indicated. That said, ACV remains at single-digit in all retail channels except c-stores, where it’s barely cracked 10%. That leaves lotsa upside, Celsius team argues.
Avoiding out-of-stocks will be crucial, particularly in canned segment where there’s been ongoing squeeze, but Celsius has 4 copackers on board currently and has been accumulating inventory to carry it thru 2019 while building out copacker network for 2020 and beyond. “We’re building a really strong relationship with Refresco,” Fieldly said.
As noted, Celsius seems to be getting a second look by many trade partners as signs emerge that lock on energy category of Red Bull and Monster has been weakening, a point Fieldly readily acknowledged in reviewing wave of innovation mentioned by investor on yesterday’s call. “Amazon’s coming out with products, we have Monster Reign launched as a fitness-forward product, we have Bang, that’s a company that’s out there doing very well, and has been able to gain a considerable amount of shelf space, we have C4,” he said. “There’s a lot of other players out there really going after this space. But Celsius has this authenticity really coming from being born and steeped in science, born in the diet nutrition, sports nutrition channel.” (Both Bang and C4 have deep roots in supplement biz.)
In Asia, where key investor Li Ka-shing is based, co has revamped its launch effort, opting to pursue licensing model with Qifeng Food Technology rather than shouldering costs itself. That alliance, which closed in Mar, gives Qifeng exclusive rights to make and market Celsius-branded items in China, in exchange for licensing fee of $6.9 mil over next 5 years, at which point it will transition to volume-based royalty fee. Qifeng also is to repay the $12.2 mil already invested in market by CELH over that 5-year term. That trims some of potential short-term upside, but offers “risk-mitigated” approach to difficult market that’s proved difficult to master even for well-resourced cos like Monster Beverage. “Consumer demand is very strong in China and we are pleased to shift to this model in the region that allows us to focus our working capital in North America and other emerging markets,” as Fieldly put it on investor call yesterday. So far, partners have gotten Celsius shelved at 65K locations in 63 cities in China.
On marketing front, Celsius has signed as official performance energy drink sponsor with eSports promoter Echo Fox, while continuing to reach endurance athletes as Tough Mudder sponsor, working events at 23 cities starting last month and reaching 200K+ health-minded consumers. And while RTD items are priority, co also is looking to broaden usage of its powder packs, in part by integrating them into smoothies, say, via partnership with Smoothie King chain. (BBI got assist from Thomson Reuters StreetEvents transcript in assembling this story.)
“Grumbling” would seem to be the word for NY Times critic Pete Wells’ take on move by renegade chef Danny Bowien’s efforts to build menu around AriZona Iced Tea products at his Mission Chinese eatery in Brooklyn’s Bushwick nabe. Monthlong “Great Buy” menu – phrase is lifted from slogan accompanying AriZona’s 99-cent preprice on its big-boy cans – uses Long Island co’s bevs on 2 savory dishes, 1 cocktail and dessert. Under headline “Product Placement Seeps Into a Menu,” Wells takes issue with high sugar content of AriZona bevs, and obesity issue plaguing many Bushwick residents (tho surely not the affluent patrons of Mission Chinese, from what we’ve ever observed), and quotes rival chef Bobby Flay saying, “I would never take a product and force it into my menu, ever. Ever.” And with tea flavor of AriZona drinks typically overwhelmed by all the sugar, Wells attributes any green tea taste in Green Tea Noodles with Chicken entrée to matcha that’s been sprinkled on top. Enfant terrible Bowien, known for innovations like kung pao pastrami, once deployed Kellogg’s cereals in his menu, albeit with charitable component that critic noted is missing in AriZona tie-in. Of course, other high-sugar bev purveyors like PepsiCo and Coke have similarly been trying to integrate their drinks into gourmet menus in hopes of glorifying segment that’s fallen into disrepute among affluent, well-educated consumers. Story can be read here.
Red Jacket Now Mainly a Bevco, Not Grower With a 3d generation taking over, Red Jacket is cutting back its orchard acreage in order to focus more intently on its juice biz, NewYorkUpstate.com reports. Operated by Nicholson family since 1958, orchard overlooking Seneca Lake near Geneva, NY, has occupied about 400 acres of fruit trees, yielding fruit sold at farmers markets up and down East Coast. But items coming out of juicery it built on property in 2010 have come to dominate sales, 80% of overall biz, so prexy/ceo Brian Nicholson has set plan to double bev sales over next 5 years and cut back on orchards that have suffered several crop losses in recent years. Co also is exploring entering hard cider segment, but hasn’t made decision yet, website reported.
Cannabis-infused-drinks maker K-Zen Beverages said it’s received $5 mil in seed funding from early-stage VC firm DCM, with proceeds to go toward product innovation and building retail base as it aims for summer launch. SF-based K-Zen was cofounded by former Earthbound Farm cmo Judy Yee and former VF exec Soon Yu. Both had earlier worked at Clorox and Chiquita and are sharing ceo duties. DCM had earlier invested in seed round of on-demand cannabis delivery platform Eaze . . . Iconic Brands, which has built biz around celeb-branded spirits, has closed on acquisition of Green Grow Farms, clearing way for push into CBD-infused bevs in year’s 2d half. “Under the newly formed subsidiary, Hempology Inc, Iconic Brands is, to the extent the law allows, developing liquor-based products infused with hemp and CBD,” said co, presumably referring to overseas markets, insofar as TTB is not granting label approval to alc-based hemp items . . . Sipp Industries is claiming to have landed familiar grocery banner, Hy-Vee, for its Major Hemp HIPA beer line, a THC- and CBD-free entry which it said is heading into undisclosed # of Hy-Vee locations in Iowa. Co says brand already has done well at 15 stores of Tony’s chain in Chicago and at Binny’s Beverage Depot wine & spirits chain . . . Transcanna Holdings said it’s signed nonbinding LOI with Persuasion Brewing of Modesto, Calif, to create a div within TransCanna’s newly purchased 196K-sq-ft facility in Vancouver, BC, to produce a range of CBD-infused non-alc beers, with TransCanna funding needed equipment including canning and bottling lines.
Athletic Beer Doubles Capacity as Retailers Embrace NA Beers; DTC Biz Ignites; No Rush on CBD
Undaunted by onslaught of major brewers’ non-alc beer entries, Conn-based Athletic Beer is doubling its production capacity and enlisting major wholesale partners in Northeast, even as it eyes Calif launch for this fall. At event last night at David Burke Tavern in NY, founder Bill Shufelt said Stratford-based co is moving over 500 bbl per month, with arrival of 100-bbl tanks about to double capacity, as brand continues to be embraced by retailers like Whole Foods, Trader Joe’s and Wegmans, which are starting to set aside sections for nascent NA beer segment. At launch a year and a half ago, Shufelt had anticipated current capacity would sustain co for 5 years.
Tho brands like Heineken 0.0 are gettin’ big push, that may be helping cause of Athletic in establishing category, Bill believes. In any case, he argues it’s differentiated product, going to full fermentation via proprietary process in way that doesn’t burn off esters and other compounds, as is case with brands that brew to full strength, then take liquid down below required 0.5% ABV. That makes for lush, beerlike taste and mouthfeel for entries like Run Wild IPA, Upside Dawn Golden Ale, even an All Out Stout. Shufelt said co has patents pending on process. Brand is priced vs lower-end of craft beers, say in $9.99-10.99 per 6-pack, and also sells kegs to geek accts like As Is and Top Hops and thru its own taproom.
Wholesalers seem to be flocking aboard. Among latest to sign on are Sheehan family’s Union Beer unit in NY and Long Island, where Athletic until now had self-distributed to about 100 accts, and its Craft Beer Guild arm in Hudson Valley north of city. They join existing houses like Star in Conn, Night Shift in Mass, Sheehan in NH and Pine State in Maine, with brand represented in every eastern state from Penn north to Maine. Athletic is sticking to commitment to go deep in backyard before national expansion, tho brand’s most highly developed ecommerce states signal likeliest expansion markets (see below). Shufelt anticipates taking plunge in Calif around Sep. It’s also out nationally via Total Wines chain.
Since bevs playing in burgeoning cannabis sphere will all have to be non-alcoholic, per TTB stance, that would seem to put Athletic in coveted position of offering appealing base liquid. Asked about THC/CBD plans, Sheehan said co has been approached by players at every tier of biz, from ingredients up, but will take its time until there’s greater legal and regulatory clarity. Still, cannabis fits right in with healthier-living ethos of Athletic brand and is fertile opportunity down the line, he said.
Playing on outdoorsy connotations of segment and brand name, also is reaching athletes at their points of sweat, signing on as national sponsor of Assn of Volleyball Professionals, with whom it activated contest in Huntington Beach, Calif, recently, with events in Austin and NY on way. In similar vein, this weekend Athletic Beer will work its 3d Spartan Race of year.
Direct-to-Consumer Biz Burgeons in Cali, Colo, Pac NW Because segment is encumbered by restrictions in very few states, direct-to-consumer biz has proved to be a revelation, Bill told us. Taking a leaf from “line culture” at taprooms that sees customers camping out overnight for coveted releases, Athletic teased 50 cases of its Mexican-style Cerveza Atletica online and blew it out in 8 minutes; similar quantity of gose – completely unannounced – blew out in under a minute. Biggest DTC markets have proved to be Calif, Colo and Pac NW, lending encouragement to launch in Golden State this fall. To accommodate unanticipated demand, Athletic has leased additional 10K-sq-ft of nearby warehouse space to handle that side of biz.
Thanks to acquisition of big multilevel marketer Morinda, New Age Beverage enjoyed surge in net revenues to $58.3 mil in Q1, +404%, from $11.6 mil a year earlier. (As co release didn't offer pro forma #s, excluding Morinda, we can’t provide apples-to-apples info on its branded biz like Marley, Xing Tea and Coco Libre in this initial report, nor of its DSD arm in Denver.) Net operating loss widened to $8.54 mil from $2.59 mil but net loss narrowed to $1.6 mil from $2.7 mil and co claimed positive cash flow of $11.4 mil, ebitda of $600K. And chronically low-of-cash player can now claim cash hoard of $110 mil, tho $25 mil of that will be dispensed as part of real estate deal involving Morinda’s offices in Japan.
NBEV ceo Brent Willis lauded brisk growth of noni juice marketer Morinda in Latin America, Japan and Southeast Asia but said it suffered speed bump in China after 100-day gov’t crackdown on meetings starting in Jan following indiscretions by pair of local DTC players. That forced NBEV brass to regroup in Macau to foment plans “to claw our way back” this spring as restrictions are lifted.
Morinda cofounder Kelly Olsen, termed integration “so far, so amazing,” as Morinda sales force gets grab-bag of new items to sell, including collagen entry in core noni line, NBEV’s broader RTD lineup, and forthcoming entries in CBD arena and from Health Sciences div (which just began selling radiation protection item in South Korea). Co is being cautious on CBD rollout, starting in Japan and proceeding gingerly in US, where regulatory climate is unsettled. But this is one segment that has “not given Coke and Pepsi a hundred-year start,” so is wide open to agile entrepreneurs, Willis argues. He claims to be sitting on $50 mil of pre-orders from retailers for when coast is clear.
Meanwhile, Denver DSD warehouse has relocated to site twice the size of original footprint to accommodate expansion of sku count to 900+ from 600 last year, with mini-warehouses in neighboring states and remote parts of Colorado also expanded. With branded portfolio finally cracking retailers like Walmart and 7-Eleven, as Bucha kombucha and Marley just did, Willis is hopeful small unit will grow by $20 mil this year.
On earnings call this morning, one investor wanted to know what Willis plans to do with cash hoard. “We’d like to keep it,” he replied, to go after acquisition targets and hit the gas on CBD when time is right. Given co’s newly global scale, “we probably need $60 million of working capital,” he said. “So it’s probably not that big of a balance.” His cfo, Greg Gould, also noted that $25 mil is committed to real estate transaction.