Bye Bye Bravo Brands
According to an SEC filing on September 21, Bravo Brands has filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Florida pursuant to Chapter 7 of Title 11 of the United States Code. Robert C. Furr, Esq. has been appointed Trustee in this case.
This is the latest — and certainly most severe — bad news for Bravo. The company has consistently been in financial trouble, citing costs of production, overhead, marketing, and slotting fees relative to the company’s low revenue (approx $14 million in 2006, $11 million in 2005, $2 million in 2004 according to SEC filings).
It all started to unravel in spring of this year, when CCE terminated the company’s distribution agreement, headcount was slashed (including CEO Roy Warren), and new management was put in place while a scramble for capital ensued. The new team never got the funding they needed, which was certainly impacted at least somewhat by industry factors as well as the US credit crunch.
Regardless, they’re gone now. A couple of things about Bravo’s structure and demise are worth pointing out, especially to new and young beverage companies:
- Being public (especially on the pink sheets) is rarely right for a beverage company. All your dirty laundry is public — and there’s likely to be plenty of it when you’re a highly leveraged small company. There are very few success stories for this approach.
- Playing with the big boys (CCE in this case) is risky when you’re very little. You’re likely to only get one shot and expectations are going to be very high. In this case, the expected $80-$100 million in sales was nowhere near reality.
- Beverage experience is critical, especially in the sales department. Bravo had a lack of beverage experience at the top (Roy Warren was a stock broker of 15+ years) and, as a result, they were better at making deals in the conference room than distributing and selling their product. Eventually, they gave everything to CCE, avoiding the tried and true “up and down the street” approach followed by almost every beverage success story (e.g. Snapple, AriZona, SoBe, Glaceau, etc).
- Licensed products let someone else control your destiny. They might have helped Bravo get noticed, but they had no control over how the consumer feels about licensed brands such as Spiderman or Milky Way bars. Likely they spiked and waned alongside whatever marketing efforts (e.g. Spiderman movies) the brand owner was presently running.
Have your own thoughts on Bravo’s demise? Your comments are encouraged….