The beverage industry has always been a high-risk, high reward proposition. Those that succeed tend to grow exponentially, slurping up competitors and brands that take even an inch of valuable shelf space. And while the competitive battles are fierce, great products and experienced management combine well in the recipe for success. Splash Beverage Group, Inc. (OTCQB: SBEV) has both.
In fact, on the management side, part of the team at Splash took Red Bull, the undisputed creator of the energy drink space, from $0 in sales to billions, being one of the first four members of that management team. Of course, past performance is no guarantee of future success. However, it helps a whole lot. In fact, the trajectory at SBEV is already showing its intention, with recent Q1 sales surging 2058% from $112,003 to $2,407,701 on a comparative basis. That exponential surge is a combination of two things.
First, its products are excellent. Second, management knows how to penetrate the markets. Better still, deals made during the quarter set up Q2 to be even better. And with plans to aggressively add additional products to its portfolio, SBEV is positioning itself to become a beverage space juggernaut. Thus, for investors looking for undervalued growth stock opportunities, the search can stop at SBEV.
Better yet, SBEV is only getting started. And recent acquisitions, a successful $9 million raise in February that closed the door on debt conversions, and ample cash on hand to accelerate growth are all current assets fueling SBEV's momentum in the back half of 2021. Indeed, SBEV is in motion.
Keep in mind, too, that the Q1 surge in revenues came when markets were still rattled by COVID-19 restrictions. Now, with markets returning back toward normal and with stores fully opened to the public, pedestrian retail sales will undoubtedly contribute mightily to an already strong B2B and B2C e-commerce distribution platform.
Of course, having cash is king. And SBEV does.
Capital Raise Closes Door On Debt Conversion
Not only does SBEV have an impressive amount of cash on hand, but they also raised it smartly. In February, SBEV completed a successful $9 million capital raise that brings tremendous new opportunities. Best of all, especially to investors that dislike convertible debt features, the deal closed the door on equity holders' ability to convert equity into debt.
Moreover, it clears the way for SBEV to do what it does best- discover and develop innovative, exciting, natural, and healthy drinks that, as they say, delight the body and inspire the mind. And when they find them, those new ideas and products are supported by a strategy and platform that rewards founders of beverage brands by helping them grow more rapidly and extending their market reach. The search for brands, by the way, expands worldwide, providing opportunities for unique branded products to achieve global distribution.
And SBEV's success at building brands is measurably impressive.
A Great Team Selling Great Brands
The surging early success at SBEV didn't happen by accident. Instead, the company and its shareholders benefit from SBEV staying true to a formula, or even a philosophy, of only bringing to market a beverage that meets a high threshold for quality and freshness. Notably, having health benefits, brand awareness, and socially responsible practices gives a product a strong chance of making the cut.
Undoubtedly, SBEV is particular, knowing it's the products on the shelves that drive the revenues. And based on last quarter's growth, consumers like the brands. One of SBEV's leading brands is TapouT, an international lifestyle brand that has been at the forefront of Mixed Martial Arts since its inception in 1997. And while the brand has a strong association with MMA, its consumer reach has broadened significantly.
In fact, the brand has made the mainstream, especially after expanding its lineup to include a complete line of high-performance formulations. Better still, a deal made with the Florida and Alabama divisions of GDH Holdings, Inc. in March could position the brand to earn massive distribution expansion through GDH channels. In-play are at least two of its products, TapouT Performance and TapouT Hybrid, which feature a 3-in-1 advanced performance formula that delivers hydration and cellular recovery benefits. All TapouT performance drinks restore what the body loses through physical exertion with 12 key vitamins, 68 minerals, and all 5 electrolytes.
Another brand earning attention in the specialty spirits space is Salt Tequila, a naturally flavored 100% Blanco agave tequila with a clean and sweet taste. This brand is as native as it can be by being grown, distilled, and bottled in the region of Jalisco, Mexico. SBEV notes that each specially designed bottle of Salt results from hard work, determination, and countless blends. Salt Tequila also offers various naturally flavored tequilas to enhance the pleasure, currently offering Berry, Citrus, and Salted Chocolate flavored varieties. Yes, please.
A Huge Deal In A Little Bottle- Copa Di Vino
While each product above is a tremendous asset, an acquisition made in January is expected to send revenues soaring. In a deal that showed size doesn't always matter, SBEV beat out its biggest rivals to acquire Copa Di Vino from its founder James Martin. Many people may remember the brand being first pitched on the popular television show Shark Tank, where Mr. Martin turned down two substantial offers for his company. The sharks were trying to bite off more than he wanted them to chew, and Mr. Martin decided to keep his venture wholly-owned. That decision could translate into a windfall of opportunity for SBEV.
After all, Copa Di Vino has already generated tens of millions of dollars in revenues. The better news is that with SBEV now managing the brand, confidence is high that the team can unlock massive value from both the brand and its unique packaging. Notably, the acquisition includes additional distribution within the Anheuser-Busch Network and 13,000 retail locations across various chains, in addition to e-commerce outlets.
Better still, with Copa DI Vino available in thousands of locations across the United States, the deal also creates numerous opportunities for SBEV to expand its other products into the same channels. And with the pandemic helping to reshape where and when alcoholic beverages can be sold, this deal came at one the best times possible. Several states have already said they plan to continue off-premise consumption and allow alcohol-based drinks to be sold through a drive-through. Thus, while Copa is ideal for today's market, don't be surprised when its sister product, Salt Tequila, makes it to the same shopping bag.
One other thing. And it's big. With its patented packaging process a perfect fit for stadiums, theaters, and other large venues, expect SBEV to make tremendous use of its IP as market opportunities continue to emerge and resurface. In fact, Copa Di Vino's proprietary packaging technology can be a revenue-generating cash cow from a licensing perspective and is suitable for numerous applications across the company's growing portfolio of beverage brands and industry solutions.
Better still, its first application outside of Copa can happen right at home with its Pulpoloco Sangria, a premium crafted, light-bodied, fruity, and refreshing sangria imported from Spain. And as delicious as the product is, so is the way it's packaged. Staying true to its mission to protect the integrity of its brands and remain socially conscious, Pulpoloco Sangria is aseptically filled and packed in a unique eco-friendly catocan. Taking that extra step allows for authentic Spanish sangria's true flavors to show and extend shelf life without adding any preservatives. Thus, it fits perfectly into the SBEV lineup.
And here's a safe bet...expect much more to come in 2021.
A Toast To 2021
By all measures, SBEV is positioned to generate an enormous amount of business during the back half of 2021. With the pandemic restrictions easing and having several of the industry's top minds managing the company, SBEV is in its best position ever to capitalize on multiple initiatives. The best part is that it will likely happen quickly.
Indeed, Splash Beverage Group is a rare breed of company and may offer one the most compelling value-investment propositions in the market today. Better still, at current prices, being on the same team as those that created and marketed Red Bull, which sold 7.5 billion cans last year, is an excellent motivator to the proposition.
Hence, with multiple shots on revenue-generating goals, a potentially massive patent to monetize, and cash-on-hand to grow, SBEV has earned its ticket as a trifecta of investment opportunity that should not be ignored. So, whatever brand of Splash Beverage you enjoy, toast to that accomplishment!
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