Alkaline Water more attractive to suitors as it prepares to launch hemp drink, CEO says

02 May 2019 - 01:53 pm UTC

by Jeff Sheban in Chicago

 

Alkaline Water Co., a Scottsdale, Arizona-based maker of bottled water, will become more attractive to new types of suitors as it launches Soothe, its cannabidiol (CBD)-infused bottled alkaline water, said President and CEO Ricky Wright.

 

“We’re on everybody’s radar right now,” the executive said 1 May on the sidelines of The Beverage Forum conference in Chicago, though he acknowledged the company is not currently engaged in talks to be acquired.

 

“Once we prove out this concept it opens up an entire different group of potential buyers,” he said, expanding the field from major global beverage companies such as Nestle, Pepsi, Coca-Cola and Keurig Dr Pepper, to alcoholic beverage companies Constellation Brands and Diageo, and cannabis companies such as Aurora Cannabis and Canopy Growth.

 

Alkaline Water is vying to be the first national US beverage company to bring premium, hemp-infused alkaline water to US consumers, but the legality of hemp/CBD products remains murky amid a patchwork of state, local and federal laws.

 

Soothe is being produced in limited quantities but is not yet available for retail sale. However, Wright said state laws are changing rapidly following passage of the 2018 US Farm Bill, which legalized hemp and CBD at a federal level.

 

Wright said Soothe could be available in limited markets as early as this summer, and hopefully more widely by the end of 2020. “I’m tracking 1,052 bills on the state and local level,” he said.

 

Founded in 2011, Alkaline Water bottles and sells alkaline water nationally in 1-gallon, 3-liter, 1.5-liter, 1-liter, 700ml, and 500ml sizes under the trade name Alkaline88 in stores including Walmart and Kroger. That existing supplier network is a major competitive advantage over others entering the CBD beverage space and should help Alkaline Water to get shelf space for Soothe quickly when the drinks become mainstream.

 

“The one thing we have going for us is that these guys (distributors and retailers) trust us and believe in the brand,” he said.

 

Asked about the ideal timing of an exit, the CEO said “most beverage companies get taken out” around the USD 70m revenue mark. He noted that CORE Nutrition, a maker of nutrient-enhanced bottled water, was acquired in 2018 by Keurig Dr Pepper for USD 525m. The trade publication BevNET quoted a source close to the deal as saying CORE had wholesale sales of between USD 70m and USD 80m.

 

Alkaline Water is providing revenue guidance of USD 31m - USD 33m for the 2019 fiscal year ended 31 March, which it expects to report in the coming weeks, Wright said. For fiscal 2020, the CEO said two industry analysts are projecting revenue in a range of USD 54m - USD 57m, though the company has yet to provide guidance.

 

He said for this report that revenue could reach USD 100m “within 24 months” through organic growth alone. Expanding single-serving sales of the flagship Alkaline88 product in convenience store formats is one key to growth, he said.