- New Age Beverage will review and potentially divest some of its beverage brands, including Aspen Pure, Bucha, Coco Libre, Marley and Xing Tea, BevNet said. The beverage company could decide instead to focus its resources on more well-known offerings that it distributes, including Nestea, illy Coffee and Evian.
- Brent Willis, the company's CEO, told analysts the company started looking to divest the brands about a month ago. In a transcript on Seeking Alpha, he said the offerings "got distribution and they’ve got sales," before adding that they could succeed "in the right hands."
- Greg Gould, New Age's CFO, said retail brands remain an important part of its portfolio, but that to succeed in the space and compete, companies need drinks that are "very well known, very iconic brands."
The decision to potentially divest some brands is being touted by New Age as a way to shore-up its portfolio even though the products have meaningful sales and distribution. But New Age found that while the brands may be valuable, the real growth comes in working with beverages that have wider consumer recognition and can increase their shelf space in large retailers, c-stores and e-commerce channels.
A review of its portfolio with brands such as Marley and Xing Tea come less than a year after New Age purchased Brands Within Reach, a New York-based marketing, sales and distribution company, which included the licensing or distribution rights to popular beverage brands including Nestea, illy ready-to-drink coffee, Volvic and Evian premium waters.
These brands are among the more well-known offerings in the tea, coffee and water spaces, which remain popular among consumers looking to curtail their sugar intake in favor of better-for-you beverages. In a statement, Willis said "there is no better time to be in the business of healthy products" and that his company "is extremely well positioned to address consumer concerns for staying healthy around the world with our unique portfolio of healthy products and omnichannel route to market.”
By divesting several of its drinks, New Age could spend its money on growing the reach of the more well-known brands that it recently acquired. Smaller companies such as New Age can have a harder time competing against bigger players like Coca-Cola or PepsiCo that have deeper pockets and well-established relationships with retailers and distributors. These connections become even more valuable as companies navigate the shift of food and beverage sales from stores to e-commerce, a challenge for even large CPG businesses.
"Right now, these small brands cost us a lot of money, a lot of cash and they're just too kind of heavy lifting versus the better opportunities, better, bigger brands, and better, more profitable channels we now have in better, more profitable markets," Willis said told analysts in the Seeking Alpha transcript.
During its earnings call, the company noted that it has "gained some important new distribution" on Nestea in certain Costco regions and with Walmart nationally. New Age is no doubt hoping for similar sales growth in Nestea and other bigger brands that it will decide to keep.