Facing declining revenue in its U.S. retail division, New Age Beverages will review and potentially divest some of its core portfolio of beverage brands — including Aspen Pure, Bucha, Coco Libre, Marley, and Xing Tea — the company announced this week during its Q4 and full year 2019 earnings report.
Speaking with investors yesterday, New Age CEO Brent Willis said the company’s long term plan to simultaneously grow multiple small beverage brands was “no longer strategic” and that the company is “not going to invest any more in them.” The pivot comes roughly nine months after New Age acquired marketing and sales agency Brands Within Reach, a decision that Willis indicated was not enough to offset losses from the core portfolio but did give it U.S. distribution rights to larger international brands such as Nestea, Evian, Volvic, and illy, which it will retain.
“We expected more execution from 7-Eleven and Walmart and new distribution and [Bucha and Marley] did not deliver and we expected more [accelerated growth] from the Brands Within Reach acquisition and they did not deliver either,” Willis said. “So that’s why we are taking an impairment charge on the U.S. retail brands business.”
Olivier Sonnois, president for North America at New Age, told BevNET that Aspen Pure and Coco Libre are closer to exit status and the Bucha, Marley and Xing are currently under review.
Willis added during the call’s Q&A portion that New Age will likely seek to sell off its owned brand portfolio, noting that “they’ve got distribution and they’ve got sales” and suggested that they could generate success if placed in the “right hands.”
New Age CFO Greg Gould said the divestment may result in a drop in overall revenue, but emphasized that the company will still focus heavily on the retail market for Nestea, Evian, Volvic and illy.
“We still see that retail brands can be a key part of our business … moving forward,” Gould said. “The problem is that in the retail market, you need to have brands that are very well known, and brands that are very large. And then we really see that we need to put them across both retail as well as e-tail, and then even going out and getting halo brands and putting them through our direct-to-consumer model. So then by doing that, altogether, you really do get a omni-channel market and that’s where we really see the growth coming.”
The shift follows New Age’s December 2018 acquisition of multi-level marketing wellness company Morinda, now rebranded as Nomi by New Age, which markets a variety of products including juices, topicals and makeup. Noni, however, also faced a 40% revenue decline in China last year due to the Chinese government’s crackdown on MLM companies, however sales grew 15% in Latin America. To support the Noni business, New Age has also hired former Amway consultant David Vanderveen as COO.
New Age grew revenue in 2019 to $253.7 million, up 386% from $52.2 million in 2018, however the growth largely stems from the Morinda acquisition. Gross profit was $152.7 million, up 60.2% from $9.3 million in net sales the year before. Net loss was $89.8 million, compared to net loss of $12.1 million in 2018, which Gould noted was due to a $44.9 million impairment charge.
Total assets for the company were $251.1 million compared to $158.9 million in liabilities. As of December 31, the company had working capital of $33.5 million.
At the closing of the market on Tuesday, New Age’s stock price was up 8.18% to $1.19 per share.
Update 3/17/2020: A previous version of this article said New Age will divest its entire core portfolio. The portfolio is currently up for review and divestment for each brand is an option. Two brands (Aspen Pure and Coco Libre) will likely be sold but a final decision on the others has not yet been made.