New Age Beverages Corp. will seek to change its name, dropping the “Beverages” to become “NewAge, Inc.” according to a notice of annual meeting of shareholders filed with the U.S. Securities and Exchange Commission (SEC) on Monday.
The proposed name change, which will be voted on by shareholders June 25, comes as the publicly traded company seeks to divest several beverage brands from its portfolio and diversify its product offerings into categories such as cosmetics and CBD topicals. New Age had previously announced in its past two quarterly earnings calls that it was reviewing its portfolio of core brands and would seek to divest only those that have not met expectations.
However, an executive summary deck dated May 2020 and reviewed by BevNET this week showed the company offering “all or a selection” of its entire brand portfolio, including Aspen Pure, Bucha, Coco Libre, Marley and Xing, as an acquisition opportunity. New Age president Olivier Sonnois told BevNET in March that as the company prepares to divest certain brands, products including Aspen Pure and Coco Libre were more likely to be sold than the others.
The deck also appeared to welcome offers for the company’s robust DSD network, which services over 7,000 outlets in Colorado and surrounding states and has generated over $45 million in revenue, according to the deck. The business also includes a 250,000 square foot warehouse. New Age currently distributes more than 70 brands, including Essentia, Sparkling Ice, AriZona and Silk.
Speaking this week, Sonnois said the company is not actively seeking or likely to sell its DSD network or its entire brand portfolio. The DSD network and additional brands that the company prefers to retain — including shelf-stable kombucha Bucha — were included in the deck, he said, to provide further context on the company’s and individual brands’ performance.
He added that many prospective buyers were interested in a full scale acquisition of New Age’s beverage division; though a sale of these assets is not being entertained, “You never say no to anything.” However, any sale of the DSD network would require an “extraordinary offer” and mark a massive shift in the company’s current strategic plans.
“DSD has been very strategic [for New Age] because we use it a lot as an incubation house for when we’re looking at new brands,” Sonnois said. “I think it plays a strategic role in the company and we continue to view it as that. We also hold what we feel are very strategic, healthy brands within the portfolio right now that we don’t necessarily want to separate from.”
According to Sonnois, beverages currently account for roughly 85% of New Age’s business and will continue to play a significant role for the foreseeable future, even as the company looks to expand its presence in other CPG categories. To date, no brands have been sold; however, Aspen Pure and Coco Libre have been placed “on strategic hold” and were delisted from the company’s website. Marley, which Sonnois said has been pulled for retooling, is also currently on hiatus.
Both the corporate name change and portfolio shuffle come as New Age continues to evolve its platform and approach to the market. In December 2018, the company announced an $85 million merger with Utah-based multi-level marketing (MLM) company Morinda, which sells Tahitian noni juice and other plant-based products. The deal was intended to help New Age expand its presence in CBD beverages to international markets including China and Japan. The company has since been rebranded as Noni by NewAge.
According to Sonnois, the company has put plans for CBD edibles and beverages on hold due to the uncertain regulatory environment and will instead focus on CBD topicals, tinctures and gels.
In June 2019, New Age acquired Sonnois’ beverage marketing, branding and sales agency Brands Within Reach for $500,000, plus the transfer of 700,000 shares of stock and the assumption of $2.5 million in debt by New Age. The deal also gave the company U.S. licensing rights for several international brands including evian, illy, Nestea and Volvic.
During the annual meeting, in addition to changing the name, shareholders are also scheduled to vote on reincorporating the company from Washington to Delaware, elect directors and to ratify the appointment of Nigerian firm Deloitte & Touche LLP as the company’s independent registered public accounting firm for the remainder of the 2020 fiscal year.
As New Age continues to explore opportunities beyond beverage, Sonnois said the company is also diversifying its channel strategy by building out its ecommerce direct-to-consumer business, a move he said was “validated” by the COVID-19 pandemic. The expanded online business, he added, will allow the company to support new product launches and bring in new partners.
“I think we’ve had some very interesting discussions with potential partnerships, companies that would be willing to maybe align with New Age to take advantage of this omnichannel platform,” Sonnois said.
Sonnois noted that ecommerce sales were up roughly 300% during the pandemic, with bottled water brands, including Volvic, among its top selling products. However, the company has taken a hit from the shuttering of food service and on-premise accounts.
In April, the company received a $6.9 million loan from the federal Paycheck Protection Program (PPP), established to aid small businesses. COO David Vanderveen defended the decision to accept the funds as necessary to protect the company’s workforce during New Age’s Q1 earnings call last month, noting the company “met all the requirements” for the loan and used the funds as intended.
Sonnois said that New Age has made personnel adjustments “on the corporate level” and internationally, but has kept its sales team intact with “limited adjustments.”
“We feel we have a great team, and I don’t want to lose any of them,” he said. “So we’ve been keeping everybody on board and we can’t wait right now for some of those markets to reopen. It seems like we used to be months away. And now we’re weeks away from some reopening of certain channels.”