The Alkaline Water Company, maker of the Alkaline88 brand, reported 20% sales growth to $46 million for the fiscal year 2021 in an earnings report last week.
The Arizona-based company, which produces a line of 8.8 pH alkaline waters and CBD-infused products, posted a compounded annual growth rate of 52% since fiscal year 2015, with gross profit of about $16.4 million (up 25% from fiscal year 2020) and a cost of goods sold equal to $29.6 million (up 17% year-over-year). Net loss was $16.4 million, compared to $14.8 million last year. Cash and cash equivalents as of March 31 was approximately $9.1 million.
The earnings report came as The Alkaline Water Company closed a $5 million non-brokered private placement financing round at a price of $1.05 per subscription receipt. The round included a $1 million investment from former NBA star Shaquille O’Neal, who joined the company earlier this year as a brand ambassador and advisor.
During the fiscal year, the Alkaline88 brand expanded distribution to over 75,000 stores nationwide and expanded into the hospitality and foodservice channels, partnering with Dot Foods and Independent Broker Alliance to service those spaces. The company is also now working to establish a DSD network and has begun working with Mahaska, Nevada Beverage Company and Hensley Beverage Company in the Southwest.
Speaking to investors and analysts during a call, CEO Ricky Wright credited the sales growth, in part, to the company’s ability to meet retailer demand amid the pandemic. A shift in early 2020 to sourcing all raw materials domestically helped Alkaline88 to ride out supply chain issues, he said, and the company also began production at two raw material manufacturers on the East Coast and added several new co-packing partners.
The Alkaline Water Company also doubled its employee count, Wright added, including the addition of a director of national sales for the convenience channel.
“The entire consumer goods channel is feeling significant inflationary pressure,” Wright said. “Working together, our sales and operational teams have already implemented strategies to ease that pressure. We’ve created strategic partnerships with co-packers and suppliers to increase efficiencies.”
In May, The Alkaline Water Company announced an equity partnership with Shaquille O’Neal and Authentic Brands Group. For the duration of the three-year contract, O’Neal will serve as a brand ambassador and join the company’s advisory board. According to Wright, O’Neal’s involvement is also helping to expedite international expansion plans for the brand, including in Canada and Mexico.
Speaking during the call’s Q&A portion, Wright noted that with O’Neal on board Alkaline88 plans to shift its marketing budget to reduce drag on revenue (such as digital couponing and BOGO promotions) and focus on using O’Neal’s name and image to drive trial.
“If I spend the same dollars outside on an ad, it goes against marketing dollars. If I spend it in store on an ad, it goes against the revenue,” he said. “So we’re moving away from that and that’s one of the reasons we brought in the national talent of Shaquille O’Neal.”