It’s a trend that’s been hard to miss.
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Changing consumer preferences toward healthier beverages have forced the industry’s giants to buy their growth by snapping up specialty, health-focused brands.
This trend is of the utmost interest to us as investors, as these take-outs have generated bidding feeding frenzies that, in some cases, have sent take-out prices into the billions.
Three good examples are Coca-Cola’s 2007 acquisition of vitaminwater ($4.2 billion), Keurig Dr Pepper Snapple’s 2017 purchase of Bai Brands ($1.7 billion) and Nestle’s recent announcement of its Essentia Water buyout (estimated at $1 billion).
Who’s next?
Well, one company that is almost certainly on the majors’ radars is The Alkaline Water Company (WTER.Nasdaq; WTER.CN).
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One Of The Specialty Beverage Sector’s
Fastest Growing Brands
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WTER has been growing at breakneck speed with products flying off the shelves at 75,000 stores in all 50 states.
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| Led by a fast-growing retail distribution network for its Alkaline88® enhanced water brand, WTER has grown steadily year over year. |
It has achieved this growth primarily by rapidly expanding the retail and distribution network for its flagship brand, Alkaline88®.
The “88” in Alkaline88® reflect the 8.8 pH level that the product offers to consumers. That happens to be the most alkaline pH possible for water using natural processes.
With many Covid-weary consumers focused on improved health, this alkaline-based water (blended with Himalayan minerals and electrolytes) has really taken off.
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A Series Of Recent Wins
…And Shaq Too!
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And the wins keep coming in bunches for WTER in 2021.
In just the past few months, the company has made headlines by:
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• Increasing its offerings at CVS, America’s largest drugstore chain...
• Growing its presence in the Midwest by securing shelf space in more than 240 Meijer Supercenters...
• Staking a beachhead in Mexico by partnering with Tienda Sindicales, a superstore grocery chain...
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WTER has made dozens of announcements like this over the past six months.
But none was more exciting than the news just two weeks ago that NBA legend Shaquille O’Neal has joined The Alkaline Water Company as an equity partner and member of the Company’s Board of Advisors.
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| Earlier this month, NBA legend Shaquille O’Neal joined WTER as an equity partner and brand ambassador. |
It’s all part of an aggressive marketing campaign WTER is launching this year to promote Alkaline88® in select markets.
Shaq will anchor the brand ambassador and influencer part of the campaign. His high visibility should give a real demand push to Alkaline88® as the company continues to aggressively expand its supply chain.
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A Host Of Ways To Increase Margins
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The Alkaline Water Company isn’t just focused on growing revenues; growing margin is equally important.
That’s why WTER’s seasoned management team has been expanding the company’s product line to include:
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• A88 InfusedTM: This line of flavor-infused, zero-calorie waters builds on the successful brand WTER has built with Alkaline88®.
• New packaging concepts: Alkaline88® now comes in 500-milliliter aluminum bottles and two-liter plastic bottles in single-serve and six pack varieties.
• A88CBDTM: Thanks to a recent acquisition, WTER is now a well-rounded lifestyle brand, with an array of CBD-infused products, including gummies, power packs, lemon-lime flavored water, bath bombs and deep-relief cream.
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In its CBD-infused line, The Alkaline Water Company sees an $8.5 billion market opportunity based on the recent legalization of hemp and subsequent explosion of hemp-derived CBD products.
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| WTER is currently in active discussion with over 9,000 retail locations to stock A88CBDTM products. |
CBD is red hot as a category right now, as evidenced by the more than 9,000 retail locations that WTER is actively talking to about stocking A88CBDTM SKUs.
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All The Pieces Are In Place
For A Lucrative Exit
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With a current market cap just over $100 million and a high-growth forecast as far as the eye can see, WTER could well deliver the beverage industry’s next billion-dollar takeout.
As Nestle’s recent Essentia acquisition indicates, the food and beverage giants’ appetite for high-growth specialty beverage and lifestyle brands is near unlimited.
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And with Shaq on board as a spokesperson, a major marketing campaign underway and a domestic and international retail footprint that’s growing by leaps and bounds, The Alkaline Water Company most certainly fits the high-growth moniker.
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Extremely well-managed and delivering growth with a super-lean, capital-efficient business model, WTER is poised for a lucrative exit in the not-to-distant future.
If you want to come along for the ride, now is the time to do so.
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