While core brand revenue declined, Flow Beverage Corp. reported consolidated net revenue growth of 5% to CAD$13.8 million in its fiscal year Q3 2024 earnings report today, marking its most profitable quarter since the company went public.
On a call with investors and analysts this morning, chairman and CEO Nicholas Reichenbach attributed much of the company’s growth in Q3 to the expansion of its co-packing business (up 62% year-over-year) and by emphasizing profitable channels for Flow’s flagship TetraPak spring waters.
Gross margin in the quarter was 34%, up from 3% in Q3 2023 and 28% in Q2 2024, with gross profit of CAD$4.6 million.
“Our co-pack business is scaling rapidly, gross margin is improving and our operating expenses are at much more sustainable levels,” Reichenbach said in a statement. “We are approaching the end of the financial impact to Flow brand from the exit of unprofitable commercial partnerships and, looking forward, we expect continued growth from Flow’s core accounts as well as a return to Flow brand growth in Q1 2025 as we make inroads into more traditional grocery aisles, signing listing agreements for Flow Sparkling Mineral Spring Water, and reaping the benefits from our leaner operating structure.”
According to Reichenbach, the company has secured an alcohol license to manufacture products for BeatBox Beverages, its largest co-packing customer with an extended six-year CAD$213 million deal.
Although the Flow brand reported net revenue declined 15% in Q3 to CAD$8.4 million, Reichenbach said the company is expecting the CPG business to return to growth in Q1 2025, noting that the impact from the decision to “exit unprofitable commercial channels is mostly behind us,” and the “sales team is making great progress in its effort to get Flow into traditional grocery aisles.”
The Flow brand also faced temporary disruptions from the company’s scaling of its Aurora production facility, but is now benefiting from changes to its whole model for ecommerce that it made to “eliminate the impact” of re-sellers online.
Last month, the brand launched a Flow sparkling mineral water line packaged in aluminum bottles, which the company expects will contribute to growth.
“We identified a larger consumer base that is a little younger in age, but also value sustainability, premium enhanced waters and all of the water’s attributes,” Reichenbach said of the sparkling line on the call. “The new consumer base that we are attracting to the Flow branded products want to drink a premium, enhanced mineral spring water both in still and sparkling.”