Splash Beverage Group, Inc. (NYSE-AMERICAN: SBEV) keeps getting stronger. To investors already in the stock, that's no real surprise. In fact, it's expected. But to others that continue to watch this company grow from the sidelines, its most recent news should be a catalyst to get them off the investors bench.
On Tuesday, SBEV announced yet another potentially massive revenue-generating, brand-expansion catalyst saying that its Qsplash eCommerce sales and distribution platform is expanding its role to include its industry-leading spirits brands. Don't underestimate what that could mean to brand growth in the coming weeks and quarters. In fact, by maximizing the strength of its Oracle NetSuite software, SBEV is set to extend its SALT tequila, Copa Di Vino, and Pulpoloco sangria product reach into at least 21 states- literally overnight. Better still, with Qsplash designed to handle the logistics, orders are more than automated and filled from sales to shipment- they are meticulously managed to create high-margin cost-effective growth.
The better news is that SBEV will hit the revenue-generating ground running by staying focused on serving business-to-business customers best-in-class brands. Already, Qsplash shows its value by enhancing the distribution of TapouT performance drink, helping to efficiently expand that brands reach into markets across the country. But with SBEV's premium line of spirits implemented into the channel, expect Qspalsh to accelerate market penetration for each. And that translates to high-margin, potentially exponential revenue growth for Splash Beverage. Here's why:
Video Link: https://www.youtube.com/embed/HOkwJNVESk0
Managed Expansion Into 21 States
Foremost, Qsplash instantly provides a direct-to-consumer sales channel of Splash’s alcoholic brands with instant coast to coast coverage in the U.S. In fact, at least 21 states have passed laws allowing shipments of spirits brands directly to the consumer. And that legislation can do for the spirits market what it did for the wine market- drive exponential growth. Better still, the Qsplash platform does most of the heavy lifting by getting products to the right distribution channels at the right time, creating wider gross margins, inventory management, and faster roll-out to new geographic markets.
Better still, the strength of Qspalsh is that it makes many of the what, when, and why decisions. And by using its calculus, which, by the way, is similar to the platform used by Amazons' grocery and beverage fulfillment group, SBEV's best-in-class management can do what they do best. Implement the strategy and build shareholder value.
In other words, it creates the strategic road-map for management to create efficient managed expansion of SBEV's product portfolio into the right channels at the right times. And “efficient” market expansion doesn't mean slow. In fact, by using strategically placed third-party warehouses to more efficiently reach buyers in regions outside of its current hubs in California and New York, SBEV has paved its way for national rollout. By the way, a national expansion is the next logical move for the company.
Since the start of this year, BEV has inked deals to distributive its all of its brands in the multi-billion-dollar China markets and entered distribution agreements with several of the largest regional distributors of Anheuser Busch products. In fact, SBEV now has at least seven substantial US distribution agreements in place to expand its market reach for SALT tequila, Copa Di Vino, Pulpoloco sangria, and TapouT performance drink. Qsplash helps manage those deals to generate high margin sales.
Further, with management able to rely on a proven sales and logistics platform, they can stay focused on building partnerships with other large US and international beverage distributors. Most importantly, Qsplash allows SBEV to pursue a vertically integrated business strategy to incubate and launch new brands as well as test market and build momentum for future acquisitions. Simply put, the platform is a tool that when combined with marketing can create retail demand online. From there, management can evaluate its fit and migrate that brand into its product portfolio and transition to a mix of eCommerce and traditional retail outlet sales. Best of all, despite the accelerated growth, these initiatives actually save money by keeping growth accretive through a focused multichannel distribution strategy.
So, how's it going so far? In a word, excellent!
Executing In Near-Flawless Fashion
In fact, with nothing ever being perfect, it's fair to say that SBEV management has been near-flawless in executing on its mission. But, with some members responsible for helping take Red Bull energy drink from zero to billions in sales, that is often an underappreciated expectation. Nonetheless, they will likely earn major kudos from investors who check their portfolios later this year.
After all, shareholder optimism should be rewarded from a management team that closed major distribution deals, successfully uplisted to the NYSE-American exchange, raised $24 million since February, and eliminated all convertible debt from its balance sheet. And while that is last month's news, the takeaway thus far in July, including its Qsplash implementation is that SBEV is in its best position ever to create meaningful shareholder value growth in the coming weeks. Going out quarters, its valuation could easily double based only on peer revenue multiples. And, with SBEV far from mature, those valuations should get a premium as well.
Remember, investors are forward-thinkers. Yesterdays news is tradable. However, when news sets up the company for growth, those investors don't stray far. And with SBEV closing substantial distribution deals with Eagle Brands, Great Bay, Golden Beverage Company, Anheuser Busch distributor, Bernie Little, Johnson Brothers, and divisions of Gulf Distributing Holdings, LLC., those that try to time the trade may find themselves buying back at higher prices. Worse, they may find themselves chasing the stock as sales updates, including those from its SALT tequila expansion into forty-two Walmart, Inc.(NYSE: WMT) owned Sam's Club, catches the markets by surprise. By the way, growth should be anything but a surprise. The growth story is available to anyone wanting to read it.
Some of its highlights are hard to ignore.
A Massive Q1 Revenue Surge
First, to investors wanting growth, SBEV posted a massive 2058% surge in comparative Q1 revenues, led by high-value brands Copa Di Vino wine, Pulpoloco Sangria, TapouT performance drink, and SALT Naturally Flavored Tequila. Second, guidance has set expectations for more of the same, leveraging several high value distribution agreements that started late in or after the quarter. And, third, with Qsplash playing a substantial role in portfolio-wide brand development combined with an impressive capital structure with no convertible debt whatsoever, revenue-generating momentum may be only getting started.
And that momentum is generated from at least four compelling brands- Copa Di Vino, Pulpoloco sangria, SALT flavored tequila, and hydration and recovery drink TapouT. The better news is that every one of those products have substantial opportunities to earn national big-box distribution.
Copa Di Vino, its single-serve wine product that earned national attention from being the only product featured twice on the popular investment show Shark Tank, could be the first product to make that happen. Moreover, as excellent as the wine tastes, its state-of-the-art sealing technology could open additional revenue-generating opportunities through licensing agreements. Keeping in mind that unlike competing shelved wine products, Copa Di Vino can remain fresh for up to a year. Other brands have a sell-by date in months, and sometimes only days. Better still, its packaging, branding, and wine quality make this brand stand out from the crowd, even earning the distinction as Oregon's Winery Of The Year.
Its Pulpoloco sangria is also a best-in-class, made in Madrid, Spain product. And more than authentic great taste, it, too, has an additional value kicker. In fact, beyond Pulpoloco itself, many call its packaging the most socially conscious and eco-friendly design in the markets- CartoCan. This technology, which can keep Pulpoloco shelf stable for a year, is 30% more eco-friendly than aluminum or PET, uses 30% less total raw materials to create, and the raw materials used come entirely from renewable raw materials. Further, the packaging only uses wood fibers from forests managed in an exemplary fashion, giving CartoCan packages the exclusive right to bear the Forest Stewardship Council (FSC) label.
Two other brands fit well into SBEV's global expansion strategy- hydration and recovery brand TapouT Performance and SALT Naturally Flavored Tequila. Like its sister brands, each has billion-dollar market potential.
In fact, SALT 100% agave tequila is getting massive consumer attention from being one of the first to introduce flavored options to the market. That brand, by the way, is getting a boost from the 14% surge in the US tequila markets as well as from flavored spirits outselling unflavored by a 10 to 1 margin. Better still, SALT is positioned for near-term exponential growth through an impressive lineup of naturally flavored citrus, berry, and salted-chocolate flavored tequilas that offer the perfect hints of flavor and satisfies even the most distinguished cravings. Best of all, with tequila consumption surging, and with flavored varieties expected to follow the same path as flavored vodkas, SALT could be a breakout performer this year.
Frankly, with four great brands in its portfolio, that breakout star may be up for grabs. And the probability of at least one of its brands having a breakout year is near 100%. Others put the probability for all to grow exponentially by the end of the year. In either case, whether individual brand growth comes this quarter or in 2022, SBEV has the company positioned for multiple successes in multiple billion-dollar markets. And that's the reality of Splash Beverage Group.
Catalysts In Focus
Indeed, SBEV's distribution deals, brand quality, and rising demand combine to create perfect storm of revenue-generating opportunities. Moreover, benefiting from a team of experts that took a brand from zero to billions, expectations are for history to repeat. And with massive US and international markets already in play, they could deliver on that goal sooner rather than later.
Thus, while investors should embrace the near-term investment opportunities, lookingh out longer term exposes the tremendous value still untapped in SBEV. And that's with only four brands in its portfolio. It's not a stretch to expect 10-12 compelling brands under management within 24 months, making the long-term proposition a most compelling and lucrative investment consideration.
The bottom line: don't ignore the obvious and invest with experts. Splash Beverage Group delivered 2058% revenue growth, has top-tier management, compelling brands, and massive distribution deals already in place. Better still, with deals coming on line late in Q1 and Q2, momentum continues to build. Best of all, while SBEV is an an excellent company today, a year from now they are expected to be exponentially larger. And that makes investment considerable more than compelling- it makes it actionable.
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