Sep 26, 2022 (AB Digital via COMTEX) -- Don't be misled by a weak Splash Beverage Group /zigman2/quotes/207197417/composite SBEV -3.72% share price; the company is firing on all cylinders. In fact, it's fair to argue that they are in their best operating position ever after signing another significant distribution agreement, this time with Missouri-based Lohr Distributing, the exclusive Distributor of Anheuser-Busch /zigman2/quotes/209225053/composite BUD +0.56% products, to distribute SBEV's portfolio of brands throughout the state.
It's another big score for SBEV, with Lohr Distributing no small player. They currently offer a substantial customer base over 200 brands of beer, 525 brands of Spirits, and 1250 brands of Wine. That's in addition to distributing to all licensed accounts in Missouri. That's not all to like.
The better news about this agreement is that Lohr isn't taking only one or two SBEV brands; they are agreeing to distribute them all, a win-win deal that could help send Splash's revenues appreciably higher. And that could happen sooner than later, especially with TapouT, SALT, Copa Di Vino, and Pulpoloco brands continuing to gain national distribution traction. Robert Nistico thinks so. In SBEV's announcement of the deal, he said, "Remember, every time we sign a distribution deal or retail chain, we add revenue."
But this deal isn't the only headline event in recent days. Another one should have investor taste buds salivating as well.
Target Stores Adds To National And International Expansion
Splash Beverage Group announced last week it has received authorization to sell its TapouT performance drink in select Target stores across the nation. That, of course, could be the precursor to a much larger deal. And if that's the case, like its deal with Walmart /zigman2/quotes/207374728/composite WMT -0.52% , selling into the massive Target /zigman2/quotes/207799045/composite TGT -0.83% audience could be an enormous contributor to near and long-term revenues. Remember, Target is an established and iconic premium national retailer with one of the most visible brands in the nation and stores in all 50 states and the District of Columbia. Its store footprint is so substantial that 75% of the population in the U.S. lives within 10 miles of a Target store, which could ultimately put TapouT into the hands of a massive consumer audience.
Best of all, despite the enormous potential inherent to that deal, it's still just one of many. Other announced agreements continue to put SBEV products on retail shelves throughout the country and overseas, as deals in China and Latin America are also included in its announced expansion plans and already executed agreements. Individually, its brand lineup can deliver millions in sales per quarter. But combined, the long-term view is that they can generate billions. Don't scoff at that presumption.
SBEV is managed by members of the same development team that took RedBull Energy drink from zero to billions. But here's the difference. SBEV is focused on bringing brands under management that are already marketed. In other words, the brands mentioned have a running start, each having potential leadership status in the segments they represent. Splash Beverage being positioned to benefit from those positions is no accident.
An Innovator In The Beverage Industry
On the contrary, Splash Beverage Group is earning its worth as an innovator in the beverage industry by leveraging its growing portfolio of alcoholic and non-alcoholic beverage brands. Currently, that includes Copa di Vino wine by the glass, SALT flavored tequilas, Pulpoloco sangria, and TapouT performance hydration and recovery drink.
Just as important as brand strength, they also know how to monetize them. This is getting done through a strategy of rapidly developing early-stage brands, creating a national market, and then capitalizing on the high visibility of that brand and maximizing the market opportunity from products being innovators in their categories. Examples of those products are easy to find.
SALT Tequila is one, and it continues to score national attention and deals, most recently inking distribution agreements to exploit sales opportunities throughout Nevada and Maryland. Those deals, and more of them, are to be expected, a result of this 100% agave, 80-proof brand targeting a flavored spirits market seeing double-digit percentage growth.
In dollar terms, it's a category expected to eclipse $50 billion by 2027. And by offering premium chocolate, berry, and citrus flavored tequila, SALT Tequila is ideally and uniquely positioned to do more than exploit that potential; it can dominate the category. And a 42-store deal with Walmart's wholly-owned Sam's Club is making that a mission in progress.
More Innovation From Product Taste To Packaging Technology
SALT isn't the only category innovator. Copa Di Vino and Pulpoloco sangria are also changing the landscape in their respective segments. Single-serve Copa Di Vino wine earned national attention by being the only product featured twice on the popular investment show Shark Tank. A testament to Copa's taste, position, and potential, every "shark" wanted a piece of that deal. And it wasn't just the great taste they were after. Its value as a leader in package sealing technology was also recognized, one that, on its own, opens significant opportunities for SBEV to monetize. It's so revolutionary that Copa Di Vino can remain fresh for up to a year, compared to competing brands having a sell-by date in months, sometimes only days.
Splash's Pulpoloco sangria, made in Madrid, Spain, is also earning increasing attention. This best-in-class product also offers more than great taste; it too has innovative and marketable packaging technology. It's packaged inside what many have called the most socially conscious and Eco-friendly packaging in the markets- CartoCan. And the best news on that front is that SBEV holds exclusive rights to the unique packaging technology. That matters because CartoCan has the potential to be the most sought-after packaging in the beverage industry. That's an ambitious statement, but well-supported.
In addition to being 100% biodegradable, the innovative packaging technology is 30% more Eco-friendly than aluminum or PET, uses 30% less total raw materials to create, and the raw materials that are used come entirely from renewable raw materials. That includes using only wood fibers from forests managed in an exemplary fashion, which has led to CartoCan packaging earning the exclusive right to bear the Forest Stewardship Council (FSC) label. And like Copa, the CartoCan keeps Pulpoloco shelf-stable for at least a year, keeping the vibrant character of its taste profile well-protected during that time.
Brand strength and an ability to capitalize on multiple revenue-generating opportunities matter, but investors also want to see earnings and revenue growth. Splash delivers on that front as well, and in a big way.