We have extensively covered Splash Beverage Group (NYSEMKT:SBEV) in the past as a beverage player with both, alcoholic as well as non-alcoholic offerings that is growing rapidly. The company’s brands are within high-growth categories such as sports drinks, fine wines, and seasoned alcoholic beverages and it has been rapidly expanding its distribution network. While the rest of the beverage industry grapples with supply chain issues, Splash Beverages has been focused on multiplying its revenues by adding more and more distributors. It is important to highlight that Splash’s revenues are a direct function of the number of distributors that it onboards as its revenues are recorded as soon as it supplies a product to the distributor network. The company does not have to wait for its products to be lifted off the retail shelf for revenue recognition which is an excellent upside for a small, fast-growing company like Splash. Let us take a closer look at its recent updates.
Business Recap
Splash Beverage Group manufactures, distributes, and markets a wide range of beverages in the U.S. market. Its core nonalcholic brand, TapouT Performance Drink is the companies isotonic sports drink for hydration and recovery and is well on track towards becoming a top isotonic sports drink brand in the U.S. just behind Gatorade, Powerade, and BodyArmor. Its other offerings include SALT Naturally Flavored Tequila, premium wine under the Copa di Vino label, and premium Pulpoloco Sangria. It also sells beverages and groceries online through its platform, qplash.com. The company’s management aims to grow early-stage companies in its portfolio, as well as acquire and accelerate high-profile brands and create new category innovators. Splash is headed by a management team that has built and achieved some of the world’s most well-known beverage brands, guiding sales from concept to multi-million-dollar success. The company is based in Fort Lauderdale, Florida.
Expanded Distribution
As per a latest press release, Splash Beverage Group signed a contract with Wisconsin-based Beechwood Sales & Service to supply TapouT performance drinks, a global lifestyle brand that offers a full line of high-performance sports beverages throughout the state. Since 1987, Beechwood Sales and Service has been an authorized Anheuser-Busch dealer. Beechwood employs more than 250 people and operates three warehouses in Wisconsin: New Berlin, Menomonie, and Wausau. Like other recent agreements, including Tri-County Beverage in Michigan, Beechwood takes the company further into the densely populated Upper Midwest. According to the sources, TapouT will have full state coverage under this agreement. Interestingly, this is not the first major expansion of Splash Beverages’ distribution network. In addition to new distribution agreements signed in the Northeast & Southwest U.S., the company was also in the news for establishing agreements with Golden Beverage Company, Johnson Brothers, Bernie Little, and branches of Gulf Distributing Holdings, LLC. Splash Beverages had also announced a significant expansion into Walmart, Inc.’s Sam’s Club, where its SALT Citrus flavoured tequila was distributed across 42 locations. The new distributors should definitely help give a major boost to Splash Beverages’ overall top-line.
Key Management Update
Splash Beverage Group has a strong management in place. One of the biggest factors inspiring investor confidence in the company is the CEO Robert Nistico, a beverage industry veteran who happened to be Red Bull North America’s fifth employee and VP or General Manager, leading the company from $0 to $1.45 billion in sales. Robert has also founded Marley Beverages and has worked at Diageo and Gallo in leadership positions, with exposure across all key functions. To support Robert in building Splash Beverages’ growth story, the company recently appointed Ron Wall as the Chief Financial Officer. Ron has an extensive knowledge of the beverage industry and over 25 years of experience in financial leadership and executive management. He served as Chief Financial Officer for William Grant & Sons, an independent family-owned and operated distiller of scotch, whiskey, and other spirits that sells to over 200 markets in 50 countries where he has led Finance, Accounting, Cost Accounting, Information Systems, Business Development, and M&A activities. Ron has the experience of overseeing the planning and delivery of $500 million in sales for the North American and Latin American regions, as well as cost controls for $50 million in overhead and $10 million in production and operating costs. Ron has also worked for Diageo in the past and is now taking over the complete finance function at Splash Beverages including accounting, tax, financial planning and analysis, treasury, M&A activities, and capital markets. Overall, the company’s top management is highly skilled and the future of Splash Beverages appears to be in safe hands.
Final Thoughts
As we can see in the above chart, Splash Beverages’ upward trajectory has begun but it is far from realizing its full potential. With the new distribution network in place, the company could easily double its revenues in 2022. It is currently trading at a forward EV/ Revenue of around 3x which could easily expand to 4-5x given the growth potential of Splash Beverages. Its TapouT brand operates in an $8 billion sports drink industry that is one of the fast-growing beverage categories. Its zero sugar and low sugar functional hydration value proposition should ensure that consumers flock to buy this brand. The company also has negligible ESG risks unlike many of its beverage peers. Overall, we believe that Splash Beverages has significant room for growth and is an excellent growth stock for our readers at SmallCapsDaily.