Splash Beverage Group, Chairman and CEO, Robert Nistico Provides Corporate Update in Letter to Shareholders

·      Every chain is different but on average the grocery segment likes to see an average of 18 units (bottles, cans etc.) sold a week, the convenience segment a bit less at around 8 to 12 units weekly

We have invested time and resources over the last 18 months establishing a vertical distribution network that gives the chains confidence we can deliver product, directly, through broad-line distributors (such as Kehe, UNFI), or via our incredibly valuable “DSD” (direct store delivery) network with Budweiser, Miller/Coors, Kalil, etc.  This foundation is critical to our success as we grow, develop and/or acquire brands. 

In beverage you need a complete distribution network before the retail chains will authorize products … distributors are hesitant to sign you up until you have commitments from the chains, a classic catch 22.  Brands are built in chains, rarely up and down the street.  Fortunately, the distribution community trusts us and started signing distribution agreements in advance with Splash knowing we will deliver the chain business.  This is where our excitement comes from each time we add a new distributor. 

This process, however, moves at a pace set by each distributor and chain.  The speed can be relatively quick, in 30 days or take up to 9 or 10 months.  As a result, initial sales tend to be light while you’re waiting for the chains to authorize your brand(s) and send your distributors purchase orders.  Additionally, 95% of retail chains use a “just in time” philosophy when writing purchase orders, meaning they only order what they need to fill the shelf each week. 

Every brand goes through this process.  They add to their selling universe and then stock shelves as the system dictates.  In our case, we have added 24,000 store doors to our selling universe and will fill shelves over time as shelf schematics are reset, the buyer adds you to the advertising planner, etc. This builds over time and the second step is to negotiate display activity and that is where you see significant growth.

We also are gaining meaningful traction in the “on premise” segment (bar, restaurant, hotel).  Covid decimated that segment and shut it down for 2 years and now making small gains again in the key segment.

This is the process to build brands and revenue.  The behind-the-scenes work, and investment takes time.  At RedBull it took 5 years to sell 375K cases … there are dozens of similar examples of other well-known brands.  We believe we are exactly where we should be and positioned for continued growth with an enormous amount of runway in front of us. 

We are building a business that is serving a large and growing market, offering unique and compelling products, while we remain laser focused on day-to-day execution and reaching profitability. We are always keeping an eye on the broader market and analyzing all the trends we see developing.  We are committed to remaining flexible and agile so that we can respond to opportunities that present themselves. We would like to thank all our shareholders and supporters. We appreciate the confidence you have shown in us to date, and we look forward to earning your continued support.

Forward-Looking Statement
This press release includes “forward-looking statements” within the meaning of U.S. federal securities laws. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results and, consequently, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements and factors that may cause such differences include, without limitation, the risks disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2021, and in the Company’s other filings with the SEC. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release.

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Splash Beverage Group