Organic energy drink GURU is betting that its long-term growth potential outweighs short-term pain, as the company reported rising losses alongside record net revenue in its Q4/FY 2021 earnings report released today.
The publicly traded Canadian brand, launched in 2009, celebrated a major win last June upon landing PepsiCo Beverages Canada as its exclusive national distributor, a move that has helped the Quebec-based company expand into new regions of the country, including Ontario and Western Canada.
As reflected in the earnings report, that agreement has already yielded results. Since signing on with the soda giant in October, the brand has reached over 85% of weighted distribution in the convenience and gas channel through December. Over the course of the past 12 months, GURU has increased its points of sale by 59% to over 23,700 locations.
The partnership has fueled top line growth for GURU, as it reached record net revenues of $30.2 million (+37% from 2020) for the full-year 2021. Meanwhile, gross margin fell from 64% to 59%, a reflection of increased marketing and the “new game-changing distribution agreement and business model with PepsiCo,” according to a release. Net revenues also hit a new high in Q4, rising 38% year-over-year to $8.5 million.
“With all that has been accomplished in 2021 and with our clear focus on driving brand awareness and trial in 2022, we are now better positioned than ever to compete on a national scale as the energy drink market disruptor, with the means to invest in our progressive and differentiated brand for the first time in our history,” said GURU’s president and CEO Carl Goyette in a press release. “While these investments will impact profitability in the near term, they are key in enabling us to establish and scale the GURU brand beyond the Quebec market and across Canada, as we aim to increase our market share to sustain profitable growth in the longer term.”
Within GURU’s home market in Canada, sales were up 39% during the quarter, while U.S. dollar sales grew 43% during the period. Citing SPINS data, the company reported 32% growth nationally in the U.S. during the quarter, and a 42% increase in California.
With its Canadian operation in place, the company plans to direct more resources to support its U.S. business.
“We are actively working on increasing our product listings and continue to make meaningful headway,” said Goyette. “In the U.S. market, we will continue to invest methodically in the most profitable channels from a national perspective as well as through online sales, while also focusing on increasing our sales velocity in California in the near term, where consumers continue to respond favorably to our good energy and authentic brand positioning.”
However, the costs associated with field and trade marketing activities around GURU’s launch in Ontario and Western Canada helped contribute to a net loss of $6 million during Q4. Selling, general and administrative expenses climbed from $4.2 million last year to $10.3 million in the fourth quarter, as the company made investments in targeted marketing campaigns in those new territories. Meanwhile, set-up costs for the distribution agreement with PepsiCo Canada helped push SG&A to $27.8 million for the year, compared to $13 million in 2020.
Net loss for the full year totalled $9.8 million in 2021, a steep climb from last year’s $2.2 million. Over the 12-month period, gross profit was $17.9 million, a 27% increase from last year ($14 million).