Flow Beverage Corp.’s co-packing business fueled double-digit growth in Q1, according to the Canadian water company’s latest earnings report this morning, while branded CPG sales remained down.
- Consolidated net revenue grew 38% year-over-year to CAD$11.4 million in Q1 2025.
- Flow brand net revenue, however, dropped 5% to CAD$6.2 million.
- Co-packing revenue was up a stark 216%, driving the bulk of overall growth.
“Even with our recent production challenges, we continue to close the gap on our Flow branded revenue growth and the impact of exiting unprofitable channels,” said founder and CEO Nicholas Reichenbach on an earnings call with analysts and investors.
“We’re still dealing with challenges of scaling the operations,” he added. “We’ve had demand for our Flow brand in excess of what we can produce [and] the more we produce the higher our gross margins. We’re still confident that we will achieve gross margins in line with our financial targets once we refine our production process. We have already seen gradual improvements.”
Reichenbach also highlighted several “operational milestones” achieved during the last six weeks, including a deal to make Flow the Official Spring Water partner of pro soccer team Inter Miami and the addition of retired baseball star and Las Vegas Lights FC owner José Bautista as a strategic advisor, investor and shareholder.
“We feel that Flow partnering with athletes and sports franchises aligns very well with the refreshed brand as Flow’s mineral content and alkalinity offers a natural health benefit for those living the active lifestyle,” Reichenbach said.
According to CFO and EVP of Operations Trent MacDonald, manufacturing agreements for Flow’s co-packing services have been vital to the company’s growth, but the declines in the branded revenue stemmed from lapping last year’s results when Flow was in more retail channels.
Those accounts, however, were unprofitable and while revenue is down MacDonald noted that the company has been able to “narrow the comparison” to prior year results for four quarters in a row.
The company also improved capacity at its Aurora production facility and is set to begin producing at its targeted efficiency beginning in Q3 2025, he added.
“We are making operational improvements day-by-day and see a path to sequential improvements in profitability over the course of fiscal 2025 reflecting our focus on profitable channels, a strong base of co-pack agreements and a much leaner operating structure,” MacDonald said.